Kenya introduces VAT registration threshold for electronic services

28 July 2022

In October 2020, Kenya extended its VAT system to include the sale of electronic services to consumers by non-resident businesses selling via online marketplaces and websites.

Prior to this, foreign businesses providing electronic services in Kenya did not have to charge VAT on their sales at all. However, to remove the unfair advantage this gave non-resident companies over Kenyan resident providers, the Kenyan government implemented VAT at 16% on these types of transactions.

Until now, there has been no VAT registration threshold for these types of supplies so affected businesses needed to register from the first sale that they made to Kenya. However, to minimise the tax burden this creates for smaller non-resident suppliers, the Kenyan government has confirmed the introduction of an annual VAT registration threshold of KES 5 million (approx. £35,000).