When a Kenyan business must register for VAT
When a Kenyan business must register for VAT, when its monthly return is due, and what changes on its invoices in Achekam once it is registered.
By Achekam · · 4 min read · For Running a business businesses in Kenya
Launching soon. Some of the screens this article describes for Nigerian and Kenyan businesses are not reachable in Achekam yet. They are coming soon.
A Nairobi events company has a strong year. Bookings double, a corporate client signs a long contract, and the owner realises nobody has asked whether the business should now be charging VAT. A year later KRA asks the same question, with interest and penalties attached.
VAT registration in Kenya is triggered by turnover, and the trigger is easy to cross without noticing. This article explains when a Kenyan business must register, when returns are due, and what changes on its invoices in Achekam once it is registered.
The registration threshold at the time of writing
Under section 34 of the VAT Act 2013, a business must apply for VAT registration within 30 days once its taxable supplies reach KES 5 million in a period of 12 months. A non-resident supplier of digital services has no threshold at all.
The test looks back over 12 months, not over your financial year. So the safe habit is a running total: at the end of every month, add up the taxable supplies for the last 12 months and see how close you are to KES 5 million. When the figure crosses it, the 30 days begin.
Not every sale is the same for VAT. Kenya zero-rates exports of goods, supplies to export processing zones and ship stores, among others, and exempts financial services, unprocessed agricultural produce and the letting of residential premises, among others. Which of your sales count towards the threshold is a question to settle with your tax adviser before you rely on a running total.
At the time of writing, Kenya's standard VAT rate is 16%.
The monthly return date
A Kenyan VAT return is due by the 20th day after the end of the month. KRA is Kenya's national tax authority, and returns are filed on iTax.
Achekam does not file Kenyan returns. A person files on iTax and uploads the acknowledgement, and a different person verifies it before the return counts as filed in Achekam.
Registration also changes how you buy. Since 1 June 2023, Kenyan input VAT can be claimed only against TIMS or eTIMS invoices. A supplier invoice that did not go through eTIMS does not support an input VAT claim, however genuine the purchase. Check this on every supplier invoice from the day you register.
Achekam does not check whether you are registered
Achekam does not check whether your business is VAT-registered before it charges VAT on your documents. Registration is a matter between you and KRA. Achekam will not stop you charging VAT before you are registered, and it will not prompt you to start once you cross the threshold. Both are your responsibility.
Tax codes on each invoice line
Once the Kenya pack is activated under Settings, Jurisdiction & regulators, 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 for Kenya.
That last phrase matters. While the Kenyan VAT rate rule is awaiting platform approval, Achekam refuses to charge standard-rate VAT on a Kenyan workspace's invoice and tells the user to choose a tax code without VAT or wait. Achekam does not assume 16% until the rule is approved.
For an event company's invoice, that might look like this once the rule is approved:
| Line | Tax code |
|---|---|
| Venue hire and event management in Nairobi | Standard |
| Services supplied to a client in an export processing zone, if your adviser confirms it | Zero-rated |
| A disbursement passed through at cost, if your adviser treats it as outside VAT | Out of scope |
Tax Invoice only when a VAT number is set
Once you are registered, enter your VAT registration number in Settings under Firm Profile. Documents made by Achekam's server print it, and they are titled Tax Invoice only when a VAT number is set. Before you register, leave the field empty.
There is one exception to watch for. The invoice PDF downloaded or e-mailed from the invoice screen is always headed TAX INVOICE and cites the South African VAT Act, whatever your country or VAT number. A Kenyan business should bear that in mind before sending an invoice from that screen, particularly before it is registered.
Being registered also brings eTIMS into the picture for every invoice you issue; that is a separate requirement covered in its own article.
Once you are filing returns, Achekam gives you a check on that side too: 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 read the list before you file.
A registration checklist
- Keep a running 12-month total of taxable supplies, updated monthly.
- When you cross KES 5 million, apply within 30 days.
- Once registered, enter your VAT number in Firm Profile.
- Agree with your adviser the tax code for each kind of sale you make.
- Diary the 20th of every month for the return.
- Check that every supplier invoice is an eTIMS invoice before claiming input VAT on it.
Every Kenyan business must also issue invoices through eTIMS; issuing eTIMS invoices and recording them explains how that works alongside Achekam. For why a standard-rated line can be refused, see charging VAT in Nigeria and Kenya while rates await approval. And Nigeria's rules for small businesses work very differently, as set out in does a small Nigerian business have to charge VAT?.
Work out your last 12 months of taxable supplies today. Knowing how close you are to the threshold is the whole of the first step.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
