What is VAT in Kenya?
Value Added Tax (VAT) in Kenya is a consumption tax charged on taxable goods and services supplied in Kenya or imported into Kenya. The standard rate is 16%, administered by the Kenya Revenue Authority (KRA).
Kenya first introduced a sales tax in 1990, which was replaced by the current VAT framework under the VAT Act 2013. The Act modernised VAT administration and tightened the definition of taxable supplies. The standard 16% rate has been in place since 2003.
VAT registration in Kenya
Businesses with annual taxable turnover exceeding KSh 5 million are required to register for VAT with the KRA. Voluntary registration is open to businesses below this threshold. Once registered, businesses must:
- File monthly VAT returns on the KRA iTax portal
- Remit VAT collected by the 20th of the following month
- Issue ETR (Electronic Tax Register) receipts for all taxable supplies
Zero-rated supplies in Kenya
Zero-rated supplies are taxed at 0% VAT — the vendor charges no VAT but can still recover input VAT on related purchases. Zero-rated supplies in Kenya include:
- Maize (corn) flour, wheat or meslin flour, and cassava flour
- Bread and ordinary bread rolls
- Milk and cream (unprocessed or processed)
- Medicaments and pharmaceutical products
- Sanitary towels and tampons
- Agricultural inputs: fertilizers, pesticides, planting seeds
- Exported goods and services
- Supply of electricity to domestic users below 200 kWh
- Liquefied petroleum gas for household use
VAT-exempt supplies in Kenya
Exempt supplies attract no VAT and no input VAT can be recovered:
- Financial services (banking, insurance)
- Land and residential property rental
- Educational services (registered institutions)
- Health services (licensed medical facilities)
- Public transport of passengers
- Betting and gaming services (separate levy applies)
How to calculate 16% VAT in Kenya
To add VAT to a net price:
- VAT amount = Net price × 0.16
- Total (inc. VAT) = Net price × 1.16
- Example: KSh 1,000 (ex. VAT) → Total = KSh 1,000 × 1.16 = KSh 1,160. VAT = KSh 160.
To remove VAT from a gross price (reverse VAT):
- Net price = Gross price ÷ 1.16
- VAT amount = Gross price − Net price
- Example: KSh 1,160 (inc. VAT) → Net = KSh 1,160 ÷ 1.16 = KSh 1,000. VAT = KSh 160.