Withholding VAT in Kenya: Who Must Deduct It and How

By Avatechtax Team — Avatechtax Consultancy

Withholding VAT (WVAT) is a mechanism where designated payers — primarily government entities, state corporations, and registered WVAT agents — deduct VAT at source when paying for taxable supplies. KRA introduced WVAT to improve VAT collection efficiency and close the compliance gap.

Who Is Designated as a WVAT Agent?

KRA appoints entities as WVAT agents, including: government ministries and parastatals, counties, banks and financial institutions, supermarkets and large retailers, and certain NGOs. If you receive the KRA designation letter, WVAT obligations are mandatory.

How WVAT Works

When a designated payer buys a VATable supply from a registered supplier, they deduct 2% of the invoice gross value (not just the VAT portion) and remit it directly to KRA. The supplier receives the net of the WVAT deducted. The supplier then offsets this against their output VAT liability in their monthly return.

Compliance Steps for Suppliers

Recognise that WVAT certificates from buyers offset your VAT liability
Claim WVAT credits in your monthly VAT return on iTax
Retain WVAT certificates from all designated payers for 5 years
If WVAT credits exceed your output VAT, apply for a VAT refund

WVAT reconciliation is complex and error-prone. Avatechtax handles it as part of our Business and Corporate tax packages. Find out more.

Withholding VAT in Kenya: Who Must Deduct It and How

By Avatechtax Team — Avatechtax Consultancy

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