Cancelling VAT registration in Kenya
When a Kenyan business must apply to cancel its VAT registration, the final return and payment, the records to keep and how to stop charging VAT.
By Achekam · · 5 min read · For Running a business businesses in Kenya
Businesses register for VAT because they have to, and most never think about the reverse. But circumstances change. A company winds down its trading arm, a clinic stops selling taxable products and keeps only its exempt services, or a business is sold and the old entity is left with nothing to supply.
When that happens, staying registered is not a harmless leftover. Kenyan law expects a registered person who stops making taxable supplies to act, and to act quickly. This article explains the deadline for applying, the special case of businesses that only make exempt supplies, the final return, the records that outlive the registration, and the practical steps to stop charging VAT on your documents.
When you must apply: within thirty days
The VAT Act, as published on Kenya Law, requires a registered person who stops making taxable supplies to apply in writing for cancellation of its registration within thirty days. The obligation is on the business; KRA will not notice on its own that your taxable sales have stopped.
Thirty days runs from the point the taxable supplies stop, so pin down that date clearly. Was it the day the last taxable sale was invoiced, the day the shop closed, or the day the business was transferred? Agree it with your accountant and write it down, because everything else in the process counts from it. The VAT Act on Kenya Law holds the cancellation and record-keeping provisions in full, in the consolidated version the site publishes.
Businesses that only make exempt supplies
Stopping taxable supplies does not always mean stopping business. KRA explains that Kenya has two VAT rates: 16%, the general rate, on taxable goods and services other than zero-rated supplies, and 0% on the supplies listed in the Second Schedule to the VAT Act, 2013. Exempt supplies, listed in the First Schedule, are different: they are not taxable supplies, their related input tax is not deductible, and KRA says a person who only makes exempt supplies does not have to register for VAT.
So a business whose remaining activities are all exempt has stopped making taxable supplies, even though it is still trading. Note the difference from zero-rating: KRA counts 0% as one of Kenya's two VAT rates, whereas exempt supplies sit outside VAT altogether, so do not treat a business with zero-rated sales as if it were exempt. If you are unsure which category your remaining sales fall into, read VAT-exempt supplies in Kenya and check with your adviser before applying.
The final return and payment within fifteen days
Cancellation is not the end of the VAT relationship. After cancellation, the Act requires the business to submit a final return and pay all tax due within fifteen days.
A worked example in words: a business stops its taxable trade, applies for cancellation within the thirty days, and KRA cancels the registration. The fifteen-day clock for the final return and payment then starts. The final return must capture every taxable supply up to the end, including any last invoices and adjustments, and any tax due on it must be paid in the same window.
Plan the cash for that last payment before you apply. A business that is winding down often has less money coming in, and the final VAT bill can be the last thing anyone budgets for.
Records to keep after cancelling
Deregistering does not end the duty to keep records. The VAT Act requires a full and true record of every transaction, in English or Kiswahili and in electronic or other form, to be kept for five years from the date of the last entry. That includes serially numbered copies of tax invoices, credit and debit notes, purchase invoices, customs entries and stock records.
For a closing business, the risk is that records are lost with the premises. Decide who will hold them, in what form, for the full five years, and tell your accountant where they are.
Changing invoice tax codes in Achekam and closing open fiscal items
Once the business is no longer registered, its documents must stop charging VAT. In Achekam, a Kenyan business picks a tax code on each invoice line: standard, zero-rated, exempt, out of scope or reverse charge. Only standard lines carry VAT, at the approved rate. After cancellation, standard is no longer the right code for your sales; agree with your accountant which of the other codes fits what you still sell.
Be aware of a limit: Achekam does not check whether the business is VAT-registered before charging VAT on its documents. If a standard-rated line is left in a template, the invoice will still show VAT. Documents made by Achekam print the VAT registration number from Settings under Firm Profile, and are titled Tax Invoice only when a VAT number is set, so remove the number there once the cancellation takes effect.
Before the final return, look at the unfiscalised list. A Kenyan VAT return in Achekam lists the period's invoices, credit notes and till sales that are not fiscalised. It does not block the return, so it is up to you to clear those items, or understand them, before the final return goes in.
If cancelling also means you stop using your eTIMS system, the Electronic Tax Invoice Regulations have their own notice: the Commissioner must be told in writing thirty days before discontinuing the system, or within seven days after an unplanned business closure. The steps are in changing, retiring or stopping your eTIMS system.
A deregistration checklist
- Confirm the date taxable supplies stopped.
- Check whether remaining sales are exempt, zero-rated or taxable.
- Apply in writing for cancellation within thirty days.
- Give the eTIMS notice if you are discontinuing the system.
- Clear the unfiscalised list and prepare the final return.
- File the final return and pay within fifteen days of cancellation.
- Remove the VAT number in Achekam and change line tax codes.
- Arrange storage of the records for five years.
If the whole company is closing, VAT is one strand of a wider process, set out in closing a Kenyan company properly. Start with step one: the date your taxable supplies stopped decides every deadline that follows.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
