A VAT return is a monthly summary of the VAT you charged and the VAT you paid. It is filed on iTax, and any tax due must reach KRA by the 20th of the following month. The return has several sections, but the arithmetic behind it is straightforward once your records are in order.

Before you start

Make sure you have:

  • Your KRA PIN and iTax password. If you need to set up, read how to register on iTax.
  • A list of all sales for the month, with the VAT charged on each.
  • A list of purchases and expenses supported by valid tax invoices that show your PIN.
  • Any credit brought forward from last month.

If your sales and purchases are scattered across notebooks and receipts, the VAT return working sheet gives you one place for them with totals that follow the return's layout.

Step 1: add up output VAT

Total the VAT on every sale. Separate standard-rated, zero-rated and exempt sales, since each goes in a different part of the return. The VAT calculator helps if an invoice shows only a VAT-inclusive price.

Step 2: add up input VAT

Add the VAT on purchases that relate to your taxable business. Some items cannot be claimed, such as entertainment and certain vehicle costs. A purchase without a valid invoice or without your PIN on it may be refused. See eTIMS e-invoicing explained to understand why.

The expense tracker with VAT records each purchase with its VAT so this total is ready at month end.

Step 3: work out the result

Output VAT minus input VAT gives the amount payable. If the answer is negative you have a credit that is carried forward. The VAT return calculator does this in seconds and explains each line.

For example, with output VAT of KES 240,000 and input VAT of KES 150,000, the VAT payable is KES 90,000.

Step 4: file on iTax

  1. Sign in to iTax and open Returns, then File Return.
  2. Choose the VAT return and the month.
  3. Fill in the sections for sales and purchases, or upload the filled return file if you prepared it offline.
  4. Check the summary, then submit.
  5. Generate a payment slip and pay by bank or M-Pesa before the 20th.
  6. Download the acknowledgement receipt and keep it with your records.

If there is nothing to report

A month with no sales or purchases still requires a nil return. Read nil returns explained for why skipping it costs more than filing it.

If you are late

Late filing and late payment each carry penalties and interest, and the amounts add up quickly. Estimate yours in the KRA penalty calculator and read KRA penalties and interest explained. The KRA filing and payment calendar is a free way to avoid missing the date at all.

Good habits

  • Reconcile your sales to your bank or cashbook each month. The free simple cashbook makes this easier.
  • File early so errors can be fixed before the deadline.
  • Keep a copy of every return and receipt for at least five years.

New to VAT altogether? Start with VAT for small businesses in Kenya.

Procedures on iTax can change. Follow KRA's current instructions on the portal.

Common questions

What if I have no sales in a month? File a nil VAT return by the 20th. Failing to file attracts a penalty even when there is no tax to pay.

What if I have more input VAT than output VAT? The difference is a credit. You can carry it forward against future VAT or claim a refund within the time limit, with the supporting invoices.

Can I correct an error after filing? Yes, by filing an amended return, and by correcting the error in the next period where the law allows. Correct it promptly to limit interest and penalties.