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Kenya: VAT refunds and “bad debts”

Kenya: VAT refunds and “bad debts”

Taxpayers in Kenya that provide taxable supplies to customers and that charge, account for, and remit value added tax (VAT) may be eligible for a refund of the VAT regarding “bad debts.” The refunds would be available pursuant to section 31 of the VAT law.


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The VAT law in Kenya requires registration by those providing taxable supplies having a value of KES 5 million or more during the applicable period. VAT-registered persons are required to charge, account for, and remit VAT on taxable supplies to customers by the 20th day of the subsequent month.

Section 31 of the VAT law provides that if a customer fails to pay for the supplies despite the supplier remitting the amount of VAT to the tax authority, the VAT-registered person is allowed to apply for a refund on VAT paid on “bad debts” that have remained unpaid for more than three years, provided that the taxpayer has:

  • Made a supply and has accounted for and paid VAT on that supply
  • Not received any payment from the customer

The application for refund must be made within five years from the date of the supply for which the related VAT payments were made.

Read a 2020 report [PDF 423 KB] prepared by the KPMG member firm in Kenya

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