Summary
Content
I. Local Purchase For Use in Kenya
Diplomats, UN agencies, and NGOs are eligible for VAT exemption
The VAT exemption procedure is based on the proforma invoice from the supplier.
1. The proforma invoice is submitted to the Ministry of Foreign Affairs; in addition the claimer has to fill in a Tax exemption form and submit a letter requesting the exemption including a justification. The authorization should be granted after 5 days normally.
2. This Proforma invoice should be in Kenya Shillings and indicate:
- Clear description of the items
- VAT amount
- VAT number of the supplier
- PIN number of the supplier
3. Once the Ministry of Foreign Affairs has authorized the VAT exemption the documentation has to be submitted to the Kenya Revenue Authority (KRA, 20th floor, Times Tower), Domestic Department.
4. According to KRA it should take about 3 days for the VAT application to be approved. However from experience it can take between 2 to 3 weeks.
5. Some of the reasons why granting of a VAT exemption can take longer are that:
- The currency is in US $
- The VAT amount is not mentioned
- The VAT and PIN numbers of the supplier are not mentioned
- Forms are not signed by the authorised persons
6. Only after the documents have been received back that the purchase can be done.
7. A few items are not eligible for VAT exemption in Kenya (Food, electronics, clothes...).
A local NGO that wants to benefit from the VAT exemption has to prove the goods to be purchased are:
- Benefiting the population of Kenya
- Linked with a program reducing poverty
- Improving the education and health situation of the population
II. Local Purchase for Export Purposes
All exported goods are eligible for VAT exemption
A Proforma invoice with all the details mentioned in point 2 above is necessary.
1. The clearing agent has to fill in Export Document 633 and start the normal procedure for exporting of goods.
2. Export entries must be endorsed by a customs official at the exit border for proof that goods have been exported (export certification).
3. Once these documents are back in Kenya the clearing agent has to fill in the Refund Voucher form C49, joining the invoice and the letter of VAT claim from the Organisation and submitting it to the KRA on the 1st floor.
4. The VAT should be reimbursed within two weeks through a cheque at the attention of Organisation.
III. Goods in Transit
Goods that are passing through Kenya on transit to other countries are also subject to VAT charge. This is usually addressed through a transit bond that the freight forwarder executes on behalf of the consignee. The bond is cancelled once proof of export is provided.
Goods that do not attract any VAT - (Zero rated goods) - require a 10% compliance charge (incentive bond) - which is cancelled once export certification is provided.
Contacts
The Kenya Revenue Authority (KRA) is the tax collection agency of Kenya. It was formed 1 July 1995 to enhance tax collection on behalf of the Government of Kenya. It collects a number of taxes and duties, including: Value Added Tax, Income Tax and Customs.
KRA headquarters is the principal occupant of the Times Tower. For more information and downloads: http://www.kra.go.ke/