- The Kenyan VAT system includes provisions for taxing imported services, known as reverse VAT or Reverse Charge Mechanism.
- Many tax disputes could be avoided with better understanding and compliance with these provisions.
- Imported services are defined by the VAT Act as services brought into Kenya from a foreign country or special zones.
- Reverse VAT requires the Kenyan recipient to account for and pay the VAT, not the foreign supplier.
- The standard VAT rate of 16 percent is applied to the service’s market value or consideration paid.
- Tax treatment depends on the taxpayer’s registration and supply status, affecting input tax credit eligibility.
- VAT on imported services must be declared and paid via iTax using a Payment Registration Number.
Source: grantthornton.co.ke
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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