Kenya withholding VAT
- 10 October 2016 | Richard Asquith
Kenya has reintroduced its withholding VAT, backdated it to 19 January 2016.
The measure, designed to prevent VAT evasion, was first introduced in 2003. It is effectively a VAT split payment regime, similar to the one recently deployed in Italy. It allows for the Kenyan Revenue Authority to collect VAT directly from the customer in a VAT transaction, and effectively turns VAT into a Sales Tax-type of regime.
Specific organisations which are the recepiants of taxable supplies must act as VAT agents for the government. These include: banks; public bodies; and exporters. When the agents are charged VAT, they must pay it directly to the tax authorities rather than the supplier. The agent will provide the supplier with a VAT certificate which the supplier can use as proof of VAT charged in their return.
VAT withholding VAT agents must declare the amounts withheld on a weekly basis to the tax authorities.
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