^KENYA

Value Added Tax Act 2013

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Chapter 9

Deduction of Input Tax (s.17 & s.18)

Input tax on taxable supplies to, or importation made by a registered person may be deducted from the tax payable (output tax) by the person on supplies by him in that tax period, this includes

• Tax paid by a registered person on the purchase of goods. or services to be used for the purpose of his business.


• Tax paid by a registered person on the importation of goods or services to be used for the purpose of his business.


• allowable within 6 months after the end of the tax period in which the supply or importation occured.

Input tax claimable to the extent that the supply or importation was acquired to make taxable supplies.


Documents required to claim input tax(s.17(3))

• an original or certified copy of tax invoice.


• a customs entry duly certified by the proper officer and a receipt for tax payment.


• a customs receipt and a certificate signed by the proper officer stating the amount of tax paid, in case of goods purchased from a customs auction.


• a credit note for output tax already paid.


• a debit note for additinal input tax to be deducted.

Credit Notes

• Claimable within 6 months from the date of the original supply.


• previously in the repealed act (cap 476) the window was 12 months

Mixed Supplies (s.17(6))

Where a person makes both exempt and vatable supplies (mixed supplies) input tax relating to exempt supplies is not recoverable.

However, input tax for making mixed supplies is

• deductible in full, if taxable supplies are more than 90% of the total supplies.


• not deductible, if taxable supplies are less than 10% of the total supplies.


• in any other caserestricted to, the ratio of taxable supplies(A) to total supplies(B).

Disallowed Input Tax (s.17(4))

Input tax for the following items is only allowable if used for business

• Purchase, repair and maintenance of passenger cars and minibuses, including spare parts. unless exclusively acquired for the purpose of making a taxable supply of that automobile in the ordinary course of a continuous and regular business of selling or dealing in or hiring of passenger cars or mini buses; or


• Entertainment, restaurant and accommodation services unless
  
  
  • the services are provided in the ordinary course of business and the services are not supplied to an associate or employee; or.
  
  
  • the services are provided while the recipient is away from home for the purposes of the business of the recipient or the recipient’s employer

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