Almost everything you buy has VAT in it, whether you notice or not. When you shop online, the price on the screen may or may not include VAT, and when you sell online, you may or may not need to charge it. The rules are simple in principle but easy to get wrong in practice. This guide explains VAT from both sides for individuals. Check current rates and thresholds with KRA.

What VAT is

Value Added Tax is a tax on the sale of most goods and services, charged at a standard rate on the price. 16% is the current standard rate, though some goods and services are zero-rated or exempt. Businesses registered for VAT charge it to customers and pay it over to KRA, after deducting the VAT they paid on their own purchases. The final cost falls on the final consumer, which is you as a buyer.

As a buyer: is VAT in the price?

Consumer prices in Kenya usually include VAT, but not always. Business-to-business prices and quotations are often quoted before VAT, so you must add it. Use the VAT calculator to add or remove VAT from a price. If an online seller shows a price "excluding VAT", expect the tax to be added at checkout. Always read the total before you pay.

Do individuals pay VAT on imports?

Yes. Goods imported into Kenya attract import VAT along with duty, unless exempt. When you buy from an overseas website, the courier or the customs agent collects these charges, sometimes on delivery. Courier parcels and personal shipments: duty in Kenya explains how they are worked out, and the import duty calculator estimates the total. Personal buyers cannot reclaim import VAT.

As a seller: when must you register?

You must register for VAT once your taxable sales pass the registration threshold, or when you expect them to. Below the threshold registration is not required, though some small sellers register voluntarily. The VAT registration checker shows where you stand, and VAT for small businesses in Kenya explains the rules. Do not wait until you are well over the threshold: late registration can lead to penalties.

Turnover tax as an alternative

Some small businesses with turnover under the limit may pay turnover tax instead of VAT, which is simpler. The choice depends on your sales and your costs. The turnover tax calculator and the turnover tax vs VAT comparison workbook help you compare, and turnover tax for small businesses lists the conditions.

If you register: charging and claiming

A registered seller charges VAT on taxable sales and issues proper tax invoices; see VAT invoices and quotations: what to include. It can claim back the VAT paid on business purchases when it holds valid invoices. Each period it files a return and pays the difference; how to file a VAT return shows the steps, and how to register for VAT on iTax step by step explains registration.

Zero-rated, exempt and standard

Not all goods are treated the same. Standard-rated goods carry VAT at the standard rate. Zero-rated goods, such as certain exports, are taxable at zero and allow the seller to claim input VAT. Exempt goods carry no VAT and no input claim. If you sell a mix, you must treat each correctly. Exporting from Kenya and zero-rated VAT explains one common zero-rated case.

Selling on a platform

If you sell through a marketplace or social media, you remain responsible for your own VAT position. The platform's fees may include VAT, which you may be able to claim if you are registered. Keep a record of each sale and each fee. Tax obligations for online sellers and social media businesses describes what to keep.

Keep simple records

Whether you are buying or selling, keep invoices and receipts. Sellers should record each sale, its VAT and the buyer. The VAT return working sheet helps registered sellers prepare each return. Buyers who need to reclaim VAT, such as small businesses, need a valid tax invoice in their name.

A short summary

As a buyer, check whether the price includes VAT and expect import VAT on overseas purchases. As a seller, watch the threshold, choose between VAT and turnover tax, issue proper invoices and file on time. The principle is the same on both sides: know the VAT in the price, and keep the paper that proves it.