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This post addresses the question; what items are not included when determining the amount of a supply to be charged VAT in Kenya?

Items excluded

Some items are excluded when determining the amount of a supply to levy VAT on. This list is according to the date of this post. The following items are excluded from consideration in a supply for VAT purposes in Kenya:

1. The financial charge for goods sold on credit.
2. Interest for late payment.
3. Tourism levy.
4. Service charge in lieu of tips in hotels and restaurants. There are two conditions for this exclusion:
   • There must be an agreement in place.
   • The service charge must be less than 10% of the bill amount less the service charge.
5. Output VAT.
6. Exempt supplies.

This list is not complete; the tax Commissioner may exclude other items.

Feel free to send us tax and investments in Kenya questions or topics via email at taxkenya@gmail.com that you wish to be covered on this website.

Tax Planning and Strategy Quiz

This quiz will test your knowledge of key concepts and strategies in tax planning and strategy. Ready to see how well you know your tax game? Let us get started!

1 / 11

#1. What is the main goal of tax planning?

a) Avoid paying taxes altogether

b) Minimise tax liability legally

c) Delay tax payments indefinitely

2 / 11

#2. Which of the following is a common tax-saving strategy?

a) Investing in high-risk shares

b) Ignoring tax laws

c) Claiming all eligible deductions

3 / 11

#3. What is a tax deduction?

a) A reduction in the amount of income subject to tax

b) A penalty for late tax payment

c) A fee paid to the tax consultant

4 / 11

#4. Which of the following expenses can be deducted from a company’s tax return?

a) Personal groceries

b) Loan interest

c) Personal vacation costs

5 / 11

#5. What is tax deferral?

a) Paying taxes early to avoid future increases

b) Ignoring tax payments

c) Postponing the payment of taxes to a later date

6 / 11

#6. What is the benefit of contributing to a retirement account from a tax perspective?

a) It increases taxable income

b) It reduces taxable income

c) It has no impact on taxes

7 / 11

#7. What is the term used for income earned from increase in earnings from investments like shares and bonds?

a) Capital gains

b) Earned income

c) Passive income

8 / 11

#8. When you file your tax return that has unpaid taxes late, what extra taxes will you pay?

a) Penalties

b) Interest

c) Penalties and Interest

9 / 11

#9. What is the purpose of a tax credit?

a) To increase your tax liability

b) To reduce the amount of tax owed to the tax commissioner

c) To penalize non-compliance

10 / 11

#10. Which of the following is not a tax credit?

a) Overpaid tax in previous years

b) Withholding income tax

c) Incurred expenditure

11 / 11

#11. What is the difference between a tax deduction and a tax credit?

a) A tax deduction reduces taxable income; a credit reduces tax owed directly

b) A tax deduction increases taxable income; a credit increases tax owed

c) There is no difference

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