Kenya VAT Registration 2026 | KRA Threshold, iTax Steps and eTIMS Rules

If you are trying to work out whether a Kenyan business needs VAT registration in 2026, the first number that matters is KSh 5 million. Kenya Revenue Authority states that any person supplying or expecting to supply taxable goods or taxable services worth KSh 5 million or more in a year must register for VAT. That is the current threshold we verified on April 18, 2026 against KRA's live VAT guidance.

The second thing that matters is that VAT registration is no longer the only digital compliance question. KRA's eTIMS guidance now affects a much wider set of businesses, including some that are not VAT registered. That means a business can be below the VAT threshold and still need to think about electronic invoices, invoice support for deductible expenses, and the correct onboarding path.

This guide stays narrow on purpose. It focuses on Kenya VAT registration itself: who must register, what KRA currently says about voluntary registration, how to add the VAT obligation through iTax, what eTIMS changes after registration, when returns are due, when input VAT can still be claimed, and when deregistration becomes possible. If you need a calculator after reading, use the Kenya VAT calculator. If you are still setting up the company, pair this with our Kenya business registration guide.

The KSh 5 million threshold

KRA's VAT page is explicit: any person supplying or expecting to supply taxable goods and taxable services worth KSh 5 million or more in a year is required to register for VAT. The wording matters because it covers both businesses that have already crossed the line and businesses that can reasonably see that they are about to cross it.

That threshold is about taxable turnover, not profit. A business can have thin margins and still be required to register. It is also about taxable goods and services, not every possible inflow. If a business only makes exempt supplies, KRA says it is not required to register for VAT. That distinction matters for schools, parts of financial services, and other activities that sit inside the First Schedule to the VAT Act 2013.

There is another practical crossover point for small businesses. KRA's Turnover Tax guidance says that a TOT registered taxpayer dealing in vatable supplies and reaching KSh 5 million and above must register for VAT as well. In other words, being on a simplified income tax regime does not override the VAT threshold.

When registration is mandatory or optional

There are four common situations that matter in practice.

1. You are already above KSh 5 million in taxable turnover. Registration is mandatory. If you keep issuing invoices without a VAT obligation when your business has clearly moved into that bracket, you are building an avoidable compliance problem.

2. You expect to exceed KSh 5 million soon. KRA's wording includes businesses that expect to supply above the threshold. This is important for businesses that sign a large contract, import stock for a much bigger sales cycle, or move from a micro stage into a regular B2B billing pattern.

3. You are below the threshold but want voluntary registration. KRA says voluntary registration can be granted subject to conditions. That is usually relevant when a business sells to larger customers that prefer dealing with VAT-registered suppliers, or when the business wants input VAT recovery on substantial taxable purchases.

4. You are a non-resident digital supplier. KRA says non-resident persons making supplies in Kenya over the internet, an electronic network, or a digital marketplace must register for VAT whether or not they meet the annual KSh 5 million threshold. That is a separate rule and it catches businesses that assume the local turnover threshold protects them.

A useful filter is this: if your business is selling taxable supplies, is scaling fast, and invoices other businesses, treat VAT registration as an early planning issue rather than a year-end cleanup issue.

iTax and eTIMS steps

Kenya's live KRA guidance splits the job into two related systems. iTax handles the VAT obligation, return filing and payment process. eTIMS handles the electronic tax invoice side.

KRA's VAT page explains the payment flow inside iTax. You log in through iTax, go to the Payments tab, create a payment registration under VAT, select the tax period and liability, then generate the payment slip. The same VAT page also states that VAT taxpayers are identified by PINs with a VAT obligation.

For invoicing, KRA's VAT page says tax invoices should be generated from eTIMS. KRA's eTIMS onboarding page adds the operational detail: taxpayers can self-onboard without waiting for manual approval, and KRA provides different solutions depending on the size and setup of the business. For non-VAT businesses, KRA points to eTIMS Lite options such as eCitizen, USSD, and the non-VAT mobile app. For VAT taxpayers, the onboarding route usually starts from the eTIMS taxpayer portal and the appropriate software solution selection.

If you are still pre-revenue or early-stage, the operational takeaway is simple. Do not wait until you have already crossed the threshold and issued months of invoices in the wrong setup. Add the VAT and eTIMS workstream as soon as you can credibly see the threshold coming.

What changes after registration

Registration changes three things immediately.

You start charging output VAT. KRA currently lists 16% as the general rate and 0% as the zero rate. KRA also states that the old 8% rate that applied to certain petroleum supplies before 1 July 2023 was deleted by the Finance Act, 2023. That matters because a lot of older blog posts and calculators on the internet still carry the 8% number.

You need valid input documents. KRA says input VAT deductions can only be made for supplies or importations acquired to make taxable supplies, and the registered person must hold valid documentation to support the claim. KRA also says the deduction is valid only within six months after the end of the tax period in which the supply or importation occurred.

You move into monthly compliance. Filing is not optional even if one month has no real activity. Once the VAT obligation exists, the taxpayer remains in the filing cycle until KRA confirms otherwise.

KRA's own published VAT example is useful because it shows how the basic math works. The example starts with purchases with a net price of KSh 10,000, adds 16% VAT of KSh 1,600, then applies a 20% profit margin to arrive at a net sales price of KSh 12,000. Output VAT at 16% is then KSh 1,920, which leaves KSh 320 payable after deducting the KSh 1,600 input VAT. That official example is a useful mental model for business owners who still think VAT is paid on the whole sale value without netting input tax.

Returns, payment and input VAT timing

KRA's VAT page states that VAT is due on or before the 20th day of the following month. That includes both the return and the payment. If your tax period is March, the return and the payment must be in by April 20.

KRA also publishes the iTax payment steps on the same page. After logging into iTax, the taxpayer selects Payments, then Payment Registration, then VAT as the tax head and subhead, selects the tax period and liability, and generates the payment slip. Payment can then be made through approved banks or M-PESA using the KRA paybill details referenced on the page.

The other timing rule that gets missed is the six-month window for input VAT deduction. KRA says input tax deduction is valid only for six months after the end of the tax period in which the supply or importation occurred. That means invoice hygiene is not just an audit issue. It affects whether a legitimate tax credit is still usable.

There is also a broader invoice infrastructure rule now. KRA's eTIMS and public notice pages say all persons carrying on business are required to generate and transmit invoices through eTIMS, including those not registered for VAT. For a VAT-registered business, that matters because your customers increasingly expect invoice support that is aligned with KRA's digital documentation rules.

Deregistration and stale assumptions

KRA says a VAT registered person who has ceased making taxable supplies should apply for deregistration. It also says that a person whose turnover has fallen below KSh 5 million in a year may opt to be deregistered. That is an option, not an automatic switch.

The critical detail is the follow-through. KRA says that after applying for deregistration, the taxpayer should continue submitting returns until advised to stop. Businesses often assume the application itself ends the monthly compliance cycle. KRA's wording says otherwise.

Two stale assumptions are worth killing off completely in 2026:

• Stale assumption one: Kenya VAT registration threshold is KSh 16 million. Current KRA guidance says KSh 5 million.
• Stale assumption two: Kenya still has an 8% VAT rate on petroleum. Current KRA guidance says that rate was deleted effective 1 July 2023.

If you are reviewing older finance content, calculators, or accountant cheat sheets, check those two items first. They are the fastest way to spot pages that are no longer reliable.

Source set and verification date

This guide was verified on April 18, 2026 using current KRA pages and notices. Primary source set:

• KRA Value Added Tax page
• KRA How to Onboard on eTIMS
• KRA notice on onboarding non-VAT taxpayers on eTIMS
• KRA Turnover Tax page
• KRA Key Highlights of the Finance Act 2023

For adjacent Kenya tax work, also see our guides on Kenya withholding tax, Kenya income tax, and VAT rates across Africa.