Exports of goods from Kenya are zero-rated for VAT, so you charge 0 % to the foreign buyer and still reclaim the input VAT on your costs. The relief depends on proof that the goods left Kenya, so keep the customs export entry and transport documents for every invoice.
A zero-rated supply is a taxable supply at a rate of 0 %. The supplier charges no VAT but remains entitled to recover the VAT it paid on related purchases. That is the key difference from an exempt supply, where no VAT is charged and the related input tax is generally lost.
For an exporter this changes the economics. A manufacturer that buys inputs with 16 % VAT and sells abroad at 0 % builds up an input VAT credit every month, which can be offset against other output VAT or claimed as a refund. Cash flow depends heavily on how fast the refund is processed.
Zero-rating applies to listed categories in the VAT Act and its amendments, with exports of goods the best-known. Classification of services and special cases is more nuanced, so confirm each product line in writing with KRA before treating it as zero-rated.
Prices to foreign buyers should be set net of any Kenyan VAT cost. Because you recover input VAT, your cost base is the VAT-exclusive purchase price, and a competitor who wrongly includes the tax in costs will quote higher than you need to. Build the quote from net figures.
The core evidence is the customs export entry showing that the goods left Kenya, supported by the transport document, such as a bill of lading, airway bill or road consignment note, the commercial invoice and proof of payment. Records should agree on quantity, description and value.
If any link is missing, KRA can deny zero-rating and assess output VAT at the standard rate on the sale. That would turn a profitable export into a loss, because the buyer will not pay the extra tax. Treat evidence collection as part of the sale, not an afterthought.
Goods sold to a foreign buyer but collected in Kenya, for example by a freight forwarder, are a frequent grey area. Whether the sale is an export depends on the facts and the documents, so seek advice before invoicing at 0 % on an ex-works sale.
The export invoice should identify the buyer, describe the goods precisely, state quantity, price, currency and Incoterm, and show VAT at 0 %. Where you use eTIMS, record the sale as a zero-rated supply so that the data KRA receives is consistent with your return.
Include the customs entry number and the transport document reference on your internal file, even if the buyer does not need them. These cross-references let an auditor trace a sale from invoice to exit in a few minutes.
If the shipment is split into several consignments, invoice per consignment or allocate clearly. A single invoice covering goods that left on different dates and entries is difficult to defend as one coherent export.
State the delivery terms precisely. An Incoterm such as FOB or CIF tells the reader where risk passes and who paid freight and insurance, which affects the customs value and the proof of export. A bare "delivered" without a named place invites argument.
Input VAT credits accumulate on your VAT account. Where output VAT is lower than input for the period, the excess is carried forward or claimed as a refund through iTax, subject to KRA's refund procedures and verification. Expect KRA to review the claim, so prepare supporting schedules.
A refund file normally includes the VAT returns for the period, sales and purchase schedules, export documents and proof that suppliers' invoices are valid. A single purchase invoice that is missing your PIN can cause the whole claim to stall.
Do not plan cash flow around a refund date. Refunds can take months, and KRA may offset them against other liabilities. Ask your accountant to model the working capital effect of a long refund cycle before you scale exports.
Keep a running schedule of refund claims: period, amount, date filed, correspondence reference, and amount received. When KRA asks about a claim from eight months ago, the schedule tells you what was sent and what is outstanding without searching old e-mails.
Charging 16 % on an export by habit confuses the buyer and creates a correction. Charging 0 % on a sale that does not qualify exposes you to an assessment with penalties and interest. Review each new customer and product against the rules before the first invoice.
Mixing zero-rated and standard-rated lines on one invoice without clear labelling breaks the return reconciliation. Label each line, or issue separate invoices for different treatments.
Failing to keep export evidence past the shipment date is another trap. KRA can request records for five years, and a customs entry that you cannot find is as damaging as one that never existed.
Sales to customers in special economic zones or export processing zones inside Kenya are not the same as exports. Their VAT treatment follows its own rules, so do not assume the zero rate applies simply because the buyer enjoys incentives; ask KRA for confirmation first.
4invoices.net produces PDF invoices with the tax rate you enter and archives them. It does not apply zero-rating automatically, determine whether a sale qualifies or check export evidence, so the decision and the check remain yours.
Keep the export evidence in your own file per invoice, next to the archived PDF. 4b2b does not link customs entries or transport documents to invoices and does not prepare refund claims.
4softerp.net keeps financial records, including multi-company ledgers, which can help you see the input VAT build-up. The VAT return and the refund claim are prepared and filed by you or your accountant on iTax.
Export invoices are accidentally issued with 16 % VAT, overstating the price for the customer and creating a correction backlog.
Confirm the zero-rating conditions with KRA and check each export invoice before you issue it. 4invoices.net produces PDF invoices with the tax rate you enter; it does not apply zero-rating automatically.
Export evidence, such as shipping documents, customs entry and proof of payment, is scattered and unavailable at audit.
Keep export evidence in your own file per invoice, next to the PDF in the invoice archive. 4b2b does not link customs evidence to invoices.
A VAT refund claim stalls because a supplier invoice is missing your PIN.
Check purchase invoices on receipt and ask suppliers to reissue defective ones. 4b2b does not validate supplier invoices.
Exports of goods are generally zero-rated when you can prove they left Kenya, but services and special arrangements depend on the VAT Act and its conditions. Do not assume. Confirm the treatment of each product or service with KRA or your adviser, and document the conclusion in your tax file. Wrong assumptions here are expensive, because KRA can assess back-dated tax with interest.
The customs export entry, the transport document such as a bill of lading or airway bill, the commercial invoice and evidence of payment. Quantity, description and value should agree across them. Keep the set together per invoice for at least five years in case KRA reviews the sale or a refund claim.
With zero-rating you charge 0 % and can still reclaim the VAT on your costs. With an exempt supply you also charge no VAT, but you generally cannot reclaim related input tax. For exporters, zero-rating is far more favourable, which is why proving exit and classification matter so much. Confirm each product line with KRA before you set a price.
Where input VAT exceeds output VAT, the excess can be carried forward or claimed as a refund through iTax with supporting schedules and documents. KRA reviews claims and may offset them against other liabilities. Ask your accountant to prepare the file and expect the process to take time. Prepare complete schedules first, because gaps trigger further requests and delay payment.
No. 4invoices.net produces PDF invoices with the tax rate you enter and keeps an archive. It does not decide whether a sale qualifies for zero-rating, check export evidence or file refund claims, so you must confirm the treatment and check each export invoice before sending it. Keep the export evidence beside the PDF so you can defend the rate later.
This page is informational. Confirm requirements with the competent authority; 4b2b tools cover general invoicing and records only.
