Understanding VAT on Imported Services in Kenya: Compliance and Reverse Charge Mechanism Explained

• 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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