If your business is VAT-registered in Kenya, two things determine whether an invoice actually holds up: the rate you charge and the way the invoice itself is produced. Both have shifted in recent years, and the second one — eTIMS — is the part that catches businesses out, because it changes how an invoice is generated, not just what it says.

Here is what's actually required, sourced from the Kenya Revenue Authority's own guidance, and what it means if you're invoicing out of Kenya or anywhere nearby in East Africa.

The short version

  • The standard VAT rate is 16%, charged on all taxable supplies that aren't zero-rated.
  • Zero-rated supplies (listed in the Second Schedule to the VAT Act) are taxable at 0% — different from exempt supplies, which aren't taxable at all and carry no input tax recovery.
  • You must register once your taxable turnover reaches KES 5 million a year, or expects to. Below that, registration is voluntary.
  • Tax invoices must be generated through eTIMS — a serially numbered invoice from any other system is not a valid tax invoice.
  • Returns and payment are both due by the 20th of the following month, filed through iTax.

Zero-rated vs exempt isn't the same distinction

These two get mixed up constantly, and the difference affects your own VAT recovery, not just your customer's:

  • Zero-rated supplies are taxed, just at 0%. You still claim back the input VAT on costs behind them, and can be refunded any excess.
  • Exempt supplies (First Schedule) sit outside VAT altogether. If everything you sell is exempt, you don't need to register at all — but you also can't recover the VAT on what you buy to make it.

If you sell a mix of both, keep them clearly separated on each invoice — it's the only way your own input tax claim adds up correctly.

Who has to register

  • Anyone supplying, or expecting to supply, taxable goods or services worth KES 5 million or more a year.
  • Below that threshold, you can register voluntarily, subject to KRA's conditions.
  • Non-resident digital suppliers — selling over the internet or through a digital marketplace into Kenya — must register regardless of turnover.
  • Once registered, you're issued a PIN with a VAT obligation, and you're required to onboard onto eTIMS.

Why eTIMS matters more than the rate

The rate is simple. The invoicing requirement is the part worth checking carefully, because KRA is specific about the mechanics of a tax invoice, not just its content:

  • It must be serially numbered and generated through eTIMS.
  • It must show the sale details and the VAT charged clearly.
  • Only one original invoice, credit note or debit note may be issued per transaction. If the original is lost, a clearly marked certified copy can be issued instead — not a second "original".
  • Credit notes for returns or valid reductions in value must be issued within six months of the original invoice.

If your invoicing software isn't integrated with eTIMS, or you're still issuing invoices from a plain template, that's the gap to close first — the rate on the invoice was never the part that made it invalid.

Your business number label is probably wrong by default

A detail that trips up a lot of software: Kenya's business identifier on an invoice is the KRA PIN, not a generic "Business Registration Number" or "Tax ID" label borrowed from another country's template. If your invoicing tool only ships with labels for a handful of big markets, Kenya is often one of the ones left out — and an invoice that quietly mislabels your PIN looks unprofessional to a customer who knows exactly what it should say.

Filing, payment and input tax

  • VAT returns and payment are both due on or before the 20th of the month following the tax period, filed online through iTax.
  • Tax payable is output tax minus input tax for the period.
  • Input tax can only be claimed within six months after the period the supply or import occurred in, and only with valid supporting documents.
  • A 2% withholding VAT applies to taxable supplies (not exempt or zero-rated ones) — appointed withholding agents deduct it at source.
  • Importing a service from abroad? You owe reverse VAT on it regardless of whether you're VAT-registered yourself.

One more easy one to miss: if your business name, address or location changes, KRA must be notified in writing within 21 days.

A quick compliance checklist

  1. Confirm your KRA PIN is current and correctly labelled on every invoice template you use.
  2. Check your invoices are coming out of eTIMS, serially numbered, not a generic PDF template.
  3. Separate zero-rated and exempt lines clearly if you sell both.
  4. File and pay by the 20th of the following month, every month, through iTax.
  5. Claim input tax within six months of the period it relates to — don't let old claims expire unused.
  6. Issue credit notes within six months of the original invoice if goods come back.

Beyond Kenya: the same discipline applies regionally

If you trade across East Africa — Uganda, Tanzania, Rwanda or further into the continent — each tax authority sets its own VAT rate, registration threshold and invoicing rules, and none of them are interchangeable with Kenya's. The principle that catches people out is the same everywhere though: the rate on the invoice is rarely the part that invalidates it. It's almost always the invoicing mechanics — the right label, the right numbering, the right document — that get overlooked. Check your own obligations with each country's revenue authority or your accountant before assuming Kenya's rules carry over.

Getting your invoicing sorted

MyBillDash supports KES and 150+ other currencies, with business number labels that match what your country actually calls them — KRA PIN for Kenya, not a generic fallback — plus professional PDF invoices, quotes and credit notes, and a free plan to start on.

This article is general information, not tax advice, based on KRA's published VAT guidance. Confirm how it applies to your business with KRA or your accountant, and always check eTIMS requirements directly with KRA before changing how you invoice.