Point in Time
Act No: No. 35 of 2013
Act Title: VALUE ADDED TAX
[ Date of commencement: 2nd September, 2013. ]
[ Date of assent: 14th August, 2013. ]
Arrangement of Sections
PART I – PRELIMINARY
1.
Short title

This Act may be cited as the Value Added Tax Act, 2013.

PART II – ADMINISTRATION
PART III – CHARGE TO TAX
6.
Cabinet Secretary may amend the rate of tax
(1)

The Cabinet Secretary may, by order published in the Gazette, amend the rate of tax by increasing or decreasing any of the rates of tax by an amount not exceeding twenty-five per cent of the rate specified in section 5(2)(b).

(2)

Every order made under subsection (1) shall be laid before the National Assembly without unreasonable delay, and shall cease to have effect if a resolution of the National Assembly disapproving the order is passed within twenty days of the day on which the National Assembly next sits after the order is laid, but without prejudice to anything previously done thereunder.

7.
Zero rating
(1)

Where a registered person supplies goods or services and the supply is zero rated, no tax shall be charged on the supply, but it shall, in all other respects, be treated as a taxable supply.

(2)

A supply or importation of goods or services shall be zero-rated under this section if the goods or services are of the description for the time being specified in the Second Schedule.

PART IV – PLACE AND TIME OF SUPPLY
8.
Place of supply of services
(1)

A supply of services is made in Kenya if the place of business of the supplier from which the services are supplied is in Kenya.

(2)

If the place of business of the supplier is not in Kenya, the supply of services shall be deemed to be made in Kenya if the recipient of the supply is not a registered person and—

(a)

the services are physically performed in Kenya by a person who is in Kenya at the time of supply;

(b)

the services are directly related to immovable property in Kenya;

(c)

the services are radio or television broadcasting services received at an address in Kenya;

(d)

the services are electronic services delivered to a person in Kenya at the time of supply; or

(e)

the supply is a transfer or assignment of, or grant of a right to use, a copyright, patent, trademark, or similar right in Kenya.

(3)

In this section—

“electronic services” means any of the following services, when provided or delivered on or through a telecommunications network—

(a)

websites, web-hosting, or remote maintenance of programs and equipment;

(b)

software and the updating of software;

(c)

images, text, and information;

(d)

access to databases;

(e)

self-education packages;

(f)

music, films, and games, including games of chance; or

(g)

political, cultural, artistic, sporting, scientific and other broadcasts and events including broadcast television.

PART V – TAXABLE VALUE
14.
Taxable value of imported goods
(1)

The taxable value of imported goods shall be the sum of—

(a)

the value of the goods ascertained for the purpose of customs duty, in accordance with the East African Community Custom Management Act, 2004, whether or not any duty of customs is payable on the goods;

(b)

to the extent not included under paragraph (a)—

(i) the cost of insurance and freight incurred in bringing the goods to Kenya; and
(ii) the cost of services treated as part of the imported goods under this section; and
(c)

the amount of duty of customs, if any, paid on those goods.

(2)

Unless the context otherwise requires, a supply of services that is ancillary or incidental to the importation of goods shall be treated as part of the importation.

15.
Deemed taxable supply
(1)

An application of taxable supplies by a registered person for use outside his business shall be a taxable supply made by the person.

(2)

A taxable supply under subsection (1) shall be deemed to have been made by the person on the date the supply is first used outside the business.

PART VI – DEDUCTION OF INPUT TAX
18.
Tax paid prior to registration
(1)

Where—

(a)

on the date exempt supplies made by a registered person become taxable, and the person had incurred input tax on such supplies; or

(b)

on the date he is registered, a person has incurred tax on taxable supplies which are intended for use in making taxable supplies, the person may, within three months from that date, claim relief from any tax shown to have been incurred on such supplies:

Provided that this subsection shall apply where such supplies are purchased, within the period of twenty-four months immediately preceding registration or the exempt supplies becoming taxable.

(2)

Where the Commissioner is satisfied that the claim for relief is justified, he shall authorise the registered person to make an appropriate deduction of the relief claimed under subsection (1) from the tax payable on his next return.

(3)

The claim for relief from tax under subsection (1) shall be made in the prescribed form.

PART VII – COLLECTION AND RECOVERY OF TAX
19.
When tax is due
(1)

Tax shall be due and payable at the time of supply.

(2)

Notwithstanding the provision of subsection (1), a registered person may defer payment of tax due to a date not later than the twentieth day of the month succeeding that in which the tax became due.

22.
Imported goods subject to customs control
(1)

A person shall not be entitled to obtain delivery of imported taxable goods from the control of the customs unless the person has paid, in full, the correct amount of tax due.

(2)

Notwithstanding the provisions of any other written law, any taxable goods which are imported by air, land or water shall be produced by the importer to a proper officer of customs at the customs station at or nearest to the place of entry, and any importer who fails to produce any such goods commits an offence and the goods in respect of which the offence was committed shall be liable to forfeiture.

(3)

The Commissioner of Customs—

(a)

shall collect tax payable under this Act on imported goods at the time of importation and shall, at that time, obtain such information as may be prescribed in respect of the importation; and

(b)

may make arrangements for such functions to be performed on his behalf in respect of imported goods through the postal service.

(4)

For the purposes of this section, the Commissioner of Customs may exercise any power conferred upon him by the East African Community Customs Management Act, 2004 (No. 8 of 2004) as if the reference to import duty in that Act includes a reference to tax payable on imported goods under this Act.

PART VIII – REFUND OF TAX
30.
Refund of tax paid in error

Where, in respect of any supply, tax has been paid in error, the Commissioner shall, except as otherwise provided by the regulations, refund such tax:

Provided that no refund shall be made under this section unless a claim in respect thereof is lodged within twelve months from the date the tax became due and payable under section 19.

PART IX – REGISTRATION AND DEREGISTRATION
34.
Application for registration
(1)

A person who in the course of a business—

(a)

has made taxable supplies or expects to make taxable supplies, the value of which is five million shillings or more in any period of twelve months; or