Invoicing and Tax regulation in Kenya
Invoicing Regulation in Kenya
In Kenya, following the right invoicing regulations is mandatory for businesses. Businesses need to include the date of issue, a unique identification number, supplier's name & address, VAT number and detailed nature of goods or services on the invoice. Both paper and electronic invoices are legally recognized and have the same legal validity and status.
Real-Time Reporting / Fiscalization in Kenya
Kenya Revenue Authority (KRA) introduced the usage of Electronic Fiscal Devices (EFDs) for real-time reporting. It's a compulsory requirement for businesses. It's meant to ensure that businesses fully declare their income to the government for VAT purposes. The EFDs automatically transmit sales data in real-time to KRA.
E-Invoicing in Kenya
E-invoicing in Kenya is not mandatory. But it is widely adopted due to its efficiency, reduced costs and environmental benefits. Businesses use it for both B2B and B2C transactions. E-invoices must adhere to the same regulations as traditional paper invoices.
VAT/GST/Tax Compliance in Kenya
It is mandatory for businesses to comply with tax regulations in Kenya. The standard VAT rate of Kenya is 16%, and it applies to most goods and services. A reduced rate of 0% applies to some goods and services. Businesses must register for VAT if their taxable turnover exceeds KES 5,000,000 in a 12-month period. They must file monthly returns, even if there is no VAT due. Non-residents providing digital services to Kenyan consumers must also register for VAT.
B2B, B2C, and B2G Business Regulations in Kenya
In terms of B2B, B2C, and B2G business transactions in Kenya, invoices must be issued for all transactions, detailing the nature of goods or services provided. For B2G transactions, businesses must be registered with the Procurement Oversight Authority and adhere to their regulations. For B2C and B2B transactions, proper records of all transactions must be maintained for compliance purposes. For VAT compliance, all businesses are required to register if their annual turnover exceeds the prescribed threshold.