Kenya withholding VAT

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.