The Value-Added Tax (VAT) Act is proposed to be amended in several ways.
- Firstly, liquified petroleum gas (LPG) will be exempted from VAT at 8%, making it more affordable and promoting environmental preservation. However, LPG suppliers will not be eligible for input VAT deduction, which may result in additional costs being passed on to consumers.
- Secondly, the place of supply for nonresident suppliers providing services in Kenya will be clarified.
- Thirdly, a registered person may not claim input tax if documentation is lacking and the supplier has not declared the sales invoice in the return.
- Fourthly, compensation arising from loss of taxable supplies will be treated as a taxable supply and subject to VAT.
- Finally, the VAT status of various products and services will be amended, with some becoming exempt and others being subjected to the standard rate of 16%. The proposed changes have implications for suppliers and consumers alike.
Source EY
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