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VAT on Taxi Business

id : 59   cat : Value Added Tax   
Should a taxi company be registered for VAT?

Does the taxi fee attract VAT? If so then does it mean a contracted Taxi company whose clients make payment on monthly or weekly basis should charge VAT?
Asked by : Nganga Mwangi
 DOQ : 2016-08-09 07:03:00
   Nganga Mwangi


TAXI Company
This is an interesting question since it touches on who should charge VAT & who cannot? To start with we may ask ourselves a related question.

Should MATATUs register for VAT? You are right CPA Margret. Since TAX is law one key characteristics of effective laws is ENFORCEABILITY. With the chaos in the transport business its an open secret that this objective may be difficult to achieve.

Hence the reason why MATATUs do not account for VAT.

The FIRST SCHEDULE of the VAT Act 2013 exempts transportation of PASSENGERS by matatus from VAT.

VAT Registration Requirements
For a person to be registered for VAT the following is required.

1. making of taxable supplies (excludes exempt supplies)
2. Turnover (actual or expected) of 5m and above per 12 months period.

In the event that the requirements are not met one can still apply for VOLUNTARY registration. However this application a at the DISCRETION of the Commissioner.
Answered by : Admin
 DOA : 2016-08-14
Thank you CPA
   Nganga Mwangi    Nganga Mwangi  2016-08-14 19:09:00
I think they should not because of the service they be offer and registering for VAT mean issuing vatable receipts which which may not be practical
   Margaret Wambui    Margaret Wambui  2016-08-14 17:17:00

Other Answers


But only if the taxi has been registered for Vat or if they have a turnover of 5 million. There is a renowned cab company in Westlands that were heavily penalised for not charging Vat on corporate clients. Tax is law
 votesDOWN : 0    votesUP : 0
: Phoebe Wakhungu  DOA   2016-08-14 10:03:00


Taxi co. should register if they have a turnover of 5m per year.
 votesDOWN : 0    votesUP : 0
: Vincent Mungai  DOA   2016-08-09 10:02:00

my Suggested answer
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