Withholding VAT Calculator Kenya 2026

What withholding VAT is

Under the normal VAT system, a supplier charges VAT on an invoice, collects it from the customer and later pays it to KRA. Withholding VAT changes that for some sales. When a customer who has been appointed as a withholding VAT agent buys taxable goods or services, the agent keeps back a small share of the invoice value and pays it directly to KRA on the supplier's behalf. The supplier receives the balance and counts the withheld amount as a credit on its VAT return.

The aim is to reduce the risk that VAT is collected from a customer but never paid to KRA. Withholding VAT affects the supplier's cash flow because a small part of the invoice reaches KRA instead of the supplier, but it does not increase the total VAT due.

The rate

The withholding VAT rate is 2% of the invoice value excluding VAT. The standard VAT rate remains 16%. The supplier still charges the full VAT on the invoice. The agent pays the supplier the invoice total less the withheld amount.

Who are withholding agents

KRA appoints agents, which include many government ministries, state agencies and some large private companies. A supplier can ask a customer whether it is an appointed agent. The law lists the supplies covered, and some, such as certain exempt and zero-rated supplies, are excluded. If you are not an appointed agent, you do not withhold.

A worked example

On an invoice of KES 100,000 before VAT, the agent withholds KES 2,000.00 and sends it to KRA. The supplier is paid the invoice total less that amount. The calculator lines show the VAT on the invoice, the withheld amount and the payment to the supplier.

What the agent does

1. Pay the supplier the invoice total less the withholding VAT.
2. Send the withheld amount to KRA by the 20th of the following month, and file the withholding VAT return on iTax, using your own login.
3. Give the supplier a withholding VAT certificate for each payment.

What the supplier does

1. Keep the certificate, because it is your evidence of the credit.
2. Show the withholding VAT credit on your monthly VAT return, which reduces the VAT you pay.
3. If the credits are larger than the VAT you owe, the excess becomes a refund claim or carries forward.

Without the certificate, KRA may disallow the credit.

Withholding VAT versus withholding income tax

These are separate taxes. Withholding VAT is a prepayment of VAT, claimed as a credit on the VAT return. Withholding income tax is a prepayment of income tax, claimed on the income tax return. A single payment to a supplier can attract both, calculated on different bases. Use the withholding tax calculator for the income tax side.

Points to check

• Whether the customer is an appointed agent in the current list.
• Whether the invoice is a valid tax invoice, issued through eTIMS where required.
• Whether the rate has changed. It was suspended and reinstated at different rates in the past, so use the date box if you are checking an earlier invoice.

The result is an estimate for information only. Confirm your obligations with KRA or a tax adviser.

Cash flow for suppliers

Suppliers who sell to withholding agents should plan for the fact that a small share of each invoice goes to KRA instead of to them. The credit comes back through the VAT return, so the effect is a timing difference, but it can be significant for a business with thin margins. Make sure invoices show the correct VAT, follow up for the withholding VAT certificate on every payment, and keep the certificates together with the invoice they relate to.

Guides, tools and templates for this topic

Read next: Withholding tax in Kenya explained: rates, agents and credits, VAT for small businesses in Kenya: when to register and what to charge, Turnover tax for small businesses in Kenya: rate, limits and when to use it

Related calculators: VAT Calculator, VAT Return Calculator, Withholding Tax Calculator

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