Kenya VAT Guide for 2026: Rates, Registration & Compliance
Kenya's standard VAT is 16%. This guide explains registration, the Digital Service Tax and VAT on electronic services, and filing via iTax.
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Key Takeaways
Kenya charges 16% VAT on most goods and services, alongside a 0% zero rate and a list of exempt supplies [1]. Registration is compulsory once taxable turnover reaches or is expected to reach KES 5 million in 12 months, and non-resident suppliers to Kenya's digital marketplace must register regardless of the threshold [1]. VAT is filed monthly on the VAT3 return, due the 20th of the following month, and businesses deduct input VAT [1]. SaaS, digital services, and clothing are taxable at 16%, while many basic and unprocessed foods are zero-rated or exempt under the VAT Act schedules [1].
Taxability Snapshot
SaaS
Taxable
Clothing
Taxable
Groceries
Partial
Digital Goods
Taxable
Sales Tax Rates
Kenya's VAT standard rate is 16% on most goods and services, including digital supplies [1]. A 0% rate covers exports and certain essentials, and some supplies are exempt [1]. The tax authority is the Kenya Revenue Authority (KRA). Separately, a 3% Significant Economic Presence (SEP) tax — which replaced the Digital Service Tax — applies to non-resident digital income and is distinct from VAT [2].
Rate | Applies to |
|---|---|
Standard 16% | Most goods, services, digital supplies |
Zero 0% | Exports, certain essentials |
Exempt | Financial services, certain agricultural and medical supplies |
Registration & nexus threshold
Kenya uses a VAT registration threshold rather than US-style economic nexus. Registration is compulsory once taxable turnover reaches, or is expected to reach, KES 5 million over 12 months [1]. Non-resident suppliers of digital or internet marketplace services to Kenyan customers must register through the simplified system regardless of the threshold [1]. Registration steps are in the How to Register section.
Filing frequency & deadlines
VAT returns are filed monthly through the KRA iTax portal, due by the 20th of the month following the period [1]. From 2026, the KRA's enhanced eTIMS system requires full digital invoicing, and un-invoiced online sales are non-deductible and flagged as undeclared income [2].
Exemptions
Exports and certain essentials are zero-rated, and financial services and some agricultural and medical supplies are exempt [1]. SaaS and digital services supplied to Kenyan customers are taxable at 16% [1].
Penalties
Late filing carries a penalty of the higher of 5% of the tax due or KES 10,000 [1]. Late payment adds a 5% penalty plus interest of 1% per month on the outstanding amount [1].
Sources
Verified July 2026 against Kenya Revenue Authority guidance.
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