30. Value Added Tax Act, No. 35 of 2013

The purpose of this Act is to review and update the law relating to value added tax; to provide for the imposition of value added tax on supplies made in or imported into Kenya.

Quick Link: https://new.kenyalaw.org/akn/ke/act/2013/35/eng@2024-12-27

· Section 5 of the Act is the charging section which gives power to KRA to charge value added tax on supplies.

· First Schedule Section A, Clause 109 which exempts from VAT, goods imported or purchased locally for the direct and exclusive use in the construction of houses under an affordable housing scheme approved by the Cabinet Secretary on the recommendation of the Cabinet Secretary responsible for matters relating to housing.

· Section B Clause 33 exempts the transfer of assets and other transactions related to the transfer of assets into real estate investment trusts and asset-backed securities.

· The net effect of exemption of value-added tax on construction inputs for affordable housing units, usually charged at 16 percent of the total price, will lead to reduced construction costs thereby leading to more affordable prices for housing units under the affordable house segment. This is partly because suppliers are unable to claim credits for VAT they pay on inputs used in production on account of the VAT exemption. Such credit can only be claimed if the construction inputs were zero-rated rather than exempt from VAT.