How to file a VAT return

## What is VAT?

VAT (Value Added Tax) is a 16% consumption tax charged on most goods and services in Kenya. If your business is VAT-registered, you collect 16% VAT on sales (output VAT) and pay 16% VAT on business purchases (input VAT). You remit the difference to KRA.

You must register for VAT if: your annual turnover exceeds KES 5,000,000.

Filing deadline: 20th of every month.

Output VAT vs Input VAT

Output VAT: VAT you charge your customers on sales (16% of taxable sales)

Input VAT: VAT you pay on business purchases (16% of taxable purchases)

VAT payable = Output VAT minus Input VAT

If input VAT exceeds output VAT, you have a VAT credit — you can carry it forward or claim a refund.

Filing VAT on iTax

Step 1: Log in to iTax

Go to itax.kra.go.ke and log in.

Step 2: Navigate to VAT return

Click Returns > File Return > VAT (Form VAT 3).

Step 3: Select the period

Choose the month and year.

Step 4: Enter your sales data

Under "Local Taxable Supplies", enter:

Total taxable sales (ex-VAT)

Standard-rated supplies (16%)

Zero-rated supplies (0%)

Exempt supplies

Step 5: Enter your purchases data

Under "Local Purchases", enter:

Total taxable purchases (ex-VAT)

Input VAT claimed

Step 6: Calculate net VAT

iTax calculates the net VAT automatically. Review the summary.

Step 7: Submit and pay

Click "Submit". Then pay the net VAT due via M-Pesa Paybill 572572 using the payment reference from your e-slip.

Nil returns

If you had no taxable activity in a month, you must still file a nil return. Failure to file (even a nil return) attracts a KES 10,000 penalty.

Late filing penalties

Fixed penalty: KES 10,000

Interest: 2% per month on unpaid tax