When a taxpayer (trader) supplies and invoices an appointed withholding Vat agent the payment for supply is made less VAT charged regardless of whether the supplier is registered for VAT or not.
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Withholding VAT
When a taxpayer (trader) supplies and invoices an appointed withholding
Vat agent the payment for supply is made less VAT charged regardless of
whether the supplier is registered for VAT or not.
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Who remits Withholding VAT?
The VAT withholding agents are legally expected to remit the withheld VAT on
behalf of the suppliers to KRA within 14 days from the date of withholding the
amount.
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How it works
• When the appointed agents make payments to the suppliers, they
deduct the 2% VAT and remit it to KRA. The balance of the payment
and the 12% VAT are paid to the supplier.
• Once the 2% VAT has been remitted to KRA through itax
acknowledgment receipt is sent to the supplier
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Withholding VAT on exempt goods and services
No VAT is withheld on exempt goods, exempt services and zero rated supplies.
Any VAT withheld in exempt and zero rated supplies is treated as tax paid in
error and therefore refundable by the commissioner.