FAQs
16) Does VAT on DMS apply for items bought on international digital market places?
DMS is imposed on services that are imported into Kenya and does not apply on goods since VAT on goods will be accounted for at the point of entry into the country
17) What is the prescribed rate for VAT on DMS/ how will VAT be computed?
A registered person shall declare and pay tax on the supplies made on the digital marketplace at the rate of 16% specified in section 5(2) (b) of the VAT Act.
18) Can digital service providers amend a VAT return?
An amended return can be done to rectify a position in line with the provisions of the Tax Procedures Act (“TPA”). However, Where an amendment results in an overpayment of tax, the overpaid amount shall be retained as a credit in favour of the person who overpaid and offset against the tax payable in the subsequent tax period.
19) When is VAT on DMS due?
It is due on or before the 20th day of the succeeding month in which the digital service was performed, invoice raised or payment made whichever comes earlier.
20) Do digital service suppliers need to issue an electronic tax invoice?
No. The supplier is however required to issue an invoice or receipt showing the value of the supply and the tax charged. The non-resident digital service suppliers are exempt from the provisions of the Electronic Tax Register.
21) Is there DMS income that will be exempt?
Yes, supplies exempt under first schedule of the VAT act of 2013.
22) What is a taxable supply in the context of a digital marketplace?
The scope for services that attract VAT on DMS have been well elaborated in the Regulations https://www.kra.go.ke/images/publications/VAT-Digital-Marketplace-Supply-Regulations.pdf
Do I have to file an income tax return if I did not earn any taxable income last year?
Yes. You are required to file a nil return by 30th June every year if you did not earn any taxable income within the year.
How do I file returns if my employer has not issued me with a P9 form?
You can file your income tax return using the ITR for Employment income only which is already pre-populated with your employment income details if your employer filed the PAYE returns through iTax. Otherwise, you should request for your p9 form from your employer.
How do I correct my return if I made errors in my declaration?
You can correct by filing an amended return. Once you log in to itax, click on the returns tab and select “File amended return”
I have other sources of Income apart from employment income. How do I declare that?
You declare by indicating that you have other sources of Income on the basic information page of the return excel. Some additional sheets will open up for you to capture the relevant details
The year 2020 had two different tax rates. How do I declare that in the return?
There is a provision for capturing employment income and pension contribution for January to March and April to December 2020 when filing returns
Which employer’s PIN do I capture in the return if I had two employers and I have two P9 forms?
You should enter both of the employers PINs by adding rows if you are filing using the excel option. If filing using the prepopulated ITR for
employment income only option the information is already captured in the system.
How do I declare mortgage when filing my returns?
By selecting yes to the question in the basic information of the excel income tax return ‘Do you have a mortgage?’ and capturing the mortgage details in sheet J - computation of mortgage. You will require a mortgage statement for the year and PIN of the lender to fill this section.
Do I have to file a return and my employer already deducted and remitted PAYE to the Kenya Revenue Authority?
Yes. Every individual with an active KRA PIN is required to file an income tax return.
What is the deadline of filing the Income Tax returns?
The deadline for filing the Income Tax returns for individual taxpayers is 30th June every year.
What is the penalty for late filing and late payment of income tax for individuals?
The penalty for late filing for individuals is 5% of the tax due or Ksh.2000 whichever is higher. The late payment penalty is 5% of the tax due and also late payment attracts an interest of 1% per month.
What is Green Channel Framework?
This is a framework that provides a list of sectors identified as low risk. Claims by taxpayers from these sectors receive preferential treatment aimed at fast tracking processing of the refunds. The claims undergo minimal verification before payment but are SUBJECT to POST AUDIT to mitigate any risk.
Why should I join the green channel?
We will offer you a preferential treatment in processing of refund claims by subjecting them to minimal verification during processing.
The green channel will earn you an Improved reputation in the Authority
You will receive enhanced business cash flows predictability and planning, due to the efficient refund processing offered to the green channel claims.
Who qualifies to join the green channel?
Any taxpayer who meets the below qualifications can join the green channel;
- A regular taxpayer with a sound compliance history.
- A taxpayer with NO past experience in any fraud related issues.
- A taxpayer with NO history of exports diversion.
- A taxpayer who UPHOLDS high compliance levels to tax laws and regulations at ALL times.
- A taxpayer who demonstrates compliance with ALL KRA requirements.
- A taxpayer who MUST produce records /information as and when required.
- A taxpayer who is ready for ANY post audits as deemed vital to determine and monitor compliance
- A taxpayer WHO upholds all conditions of being in Green Channel and one who is committed to continuous improvements of the operations and standards of the green channel.
