Supplies

Question 1

What is a supply?

Answer 1

Supply of goods or services

Question 2

what is a supply of goods?

Answer 2

Sale
Exchange
transfer of right to dispose of the goods as owner
provision of electrical energy
thermal energy
gas
water

Question 3

what is a supply of Service?

Answer 3

anything not a supply of goods or money
performance of a service for another
grant, assignment or surrender of any right
making available of a facility or advantage
tolerance of a situation
refraining from doing an act

Question 4

Conditions to satisfy a supply of imported services?

Answer 4

Made by any person
would have been a taxable supply if made in Kenya
registered person would NOT have been entitled to full amount of input tax payable if the service had been acquired by the person in a taxable supply

Question 4

Conditions to satisfy a supply of imported services?

Answer 4

Made by any person
would have been a taxable supply if made in Kenya
registered person would NOT have been entitled to full amount of input tax payable if the service had been acquired by the person in a taxable supply

Question 5

What are the supplies charged to VAT?

Answer 5

taxable supply made by a registered person
importation of taxable goods
supply of imported taxable service

Question 6

Which are the tax rates in Kenya?

Answer 6

0%
8%
16%

Question 7

Who is liable for tax on taxable supply?

Answer 7

A registered person making the supply. Recoverable from the receiver of the supply.

importation of taxable goods - the importer

imported taxable service - person receiving the supply

Question 8

When is a supply of service deemed to be made in Kenya?

Answer 8

Where the place of business of supplier is in Kenya

Question 9

Circumstances where the the place of supply of service is deemed to be Kenya if the place of business of supplier isn’t in Kenya?

Answer 9

service is physically performed in Kenya e,g Bill services to OPAL when in Ky
related to immovable property in Kenya e,g land
radio and television broadcasting service received at an address in Kenya e.g BBC, DW
electronic services delivered to a person in Kenya eg website, web hosting, remote maintenance of programs, software
transfer/assignment/grant of a right to use a copyright, patent, trademark in Ky e.g nutriset

Question 10

When is a supply of a good deemed to be made in Kenya?

Answer 10

if delivered in Kenya
installation or assembly at a place in Kenya
where goods are delivered outside Ky, goods were in Ky when the transportation commenced

Question 11

When is the time of supply of goods or services?

Answer 11

the earlier of:
date on which goods/services are delivered;
date of certificate of surveyor/architect
date invoice is issued;
date payment is received, in whole or in part

Question 12

When is the time of supply of imported goods?

Answer 12

cleared for home use - port of importation
goods entered for removal to an inland station - time of customs clearance
goods removed to a licenced warehouse after importation - time of final clearance from the warehouse
goods removed from EPZ/SEZ - time of removal from EPZ/SEZ for home use
Other cases- time goods are brought into Ky

Question 13

What is the taxable value of a supply, including supply of imported services?

Answer 13

consideration for the supply;

open market value for goods between related parties

Question 14

What is the total consideration for a supply?

Answer 14

total amount of money paid; or
open market value; and
taxes, duties, levies charged

Question 15

Inclusions to the consideration?

Answer 15

wrapper, package, box, bottle or container goods are supplied;
goods contained in or attached to the wrapper, box, bottle;
any other liability purchaser is to pay eg transportation

Question 16

inclusions to consideration for taxable supply?

Answer 16

incidental costs for supplying the service.

Disbursements are excluded

Question 17

Exclusions from consideration for a supply?

Answer 17

finance charge for hire purchase
interest accrued for late payment of consideration
tourism levy
service charge in lieu of tips

Question 18

What is the taxable value of imported goods?

Answer 18

Value of goods ascertained for purpose of customs duty
insurance and freight
cost of services treated as part of imported goods
duty of customs paid on the goods

Question 19

When is a credit note issued by a registered person?

Answer 19

when goods are returned to the supplier;

supplier reduces value of the supply after invoice is issued

Question 20

What is the time period of issuance of credit note?

Answer 20

6 months from the issue of tax invoice;

for court matters, 30 days after determination of the matter

Question 21

If a registered psn issues a credit note, what should a supplier do?

Answer 21

reduce amount of output tax in the period the credit note was issued

Question 22

What does a registered person who receives a credit note (buyer) do?

Answer 22

reduce amount of deductible input tax in which the credit note was issued by the amount of tax credited

Question 23

When is a debit note issued?

Answer 23

a registered person issued tax invoice and makes a further charge in respect of that supply.

Question 24

Who issues the debit note?

Answer 24

the supplier of the taxable supply

Question 25

what is the recipient of the debit note required to do?

Answer 25

claim as deductible input tax such further amount of tax

Question 26

what is input tax?

Answer 26

tax paid on supply to a registered person for goods/services to be used for business

tax paid by registered person on importation of goods/services for business

Question 27

what is the time period for input tax to be allowable?

Answer 27

6 months after end of tax period

Question 28

Pre-requisites for input tax to be allowed?

Answer 28

tax invoice 
customs entry and receipt for payment of tax
customs receipt
certificate by customs officer
credit note
debit note

declaration of sales invoice in the return

Question 29

When one is not allowed to deduct input tax?

Answer 29

acquisition
leasing or
hire of passenger cars or mini buses unless they are acquired for purpose of making taxable supplies and are in the business of selling, hiring

entertainment
restaurants
accommodation services in the ordinary course of business

services provided while recipient is away from home for business of the recipient or his employer

Question 30

What is the formula for determining deductible input tax?

Answer 30

A * B/C

A = total input tax payable for everything
B = value of all taxable supplies
C = value of all supplies

Question 30

What is the formula for determining deductible input tax where you have input tax attributable to both taxable supplies and other uses?

Answer 30

A * B/C

A = total input tax payable for both taxable and other uses
B = value of all taxable supplies during the period
C = value of all supplies made by the registered person

Question 31

What is the threshhold for allowing input tax credit?

Answer 31

if the deductible is more than 0.9, input tax credit for all input tax is allowed

If less than 0.1, no input tax credit is allowed for the input tax

Question 32

Time period for claiming relief on taxable supplies for tax paid prior to registration/for exempt goods?

Answer 32

3 months

Goods must have been bought less than 24 months prior

Question 33

When should VAT return be submitted?

Answer 33

20th day after the end of the period

Question 34

Types of returns?

Answer 34

payment return - when output is more than input

credit/repayment return - input is more than output and credit is carried over to the next period

nil return - no business so nothing to declare

Question 35

Penalty for submitting return after due date?

Answer 35

KES 10,000 or 5% of the tax amount, whichever is higher

Question 36

penalty on late payment?

Answer 36

5% of the tax amount

Question 37

Interest on late payment?

Answer 37

1% per month

Question 38

What is the time period for an application to submit tax return at a later date?

Answer 38

15 days before due date (for monthly returns)

30 days before due date (annual return)

Question 39

Circumstances where commissioner will require taxpayer to submit tax return?

Answer 39

bankruptcy, liquidation, winding up
taxpayer leaving Kenya permanently
death
ceases to carry on business in Kenya