In our previous article Ten Notable Changes to the Income Tax Act, we highlighted the salient amendments introduced by the Tax Laws (Amendment) Act, 2020 to the Income Tax Act, Cap 470. In this article, we have put together a comprehensive overview of some key amendments to the Value Added Tax Act, No. 35 of 2013, the Excise Duty Act, 2015, the Tax Procedures Act, 2015, the Miscellaneous Fees and Levies Act, 2016, and the Retirement Benefits Act, 1997.Value Added

Tax Act, No. 35 of 2013. The following changes are notable.

  1. Rate of VAT - The VAT rate was reduced from 16% to 14% with effect from 1st April 2020 through Legal Notice No. 35 of 26 March 2020 and was subsequently approved by Parliament on 14th April 2020.
  2. VAT on petroleum products under Section B, Part I of the 1st Schedule. Previously, the taxable value of the said petroleum products did not include excise duty fees and other charges. With the amendment, these charges shall be included in determining the taxable value of these products. It is expected that the increase in the taxable value of petroleum products will result in an increase to the final price charged to consumers.
  3. Issuance of credit notes - Prior to the amendment, the law required credit notes to be issued within 6 months after the issue of the relevant tax invoice. With the amendment, credit notes may now be issued either within 6 months after the issue of the tax invoice or within 30 days after the determination of the matter where there is a commercial dispute in court with regard to the price payable.
  4. Application for refund of tax on bad debts. The period for application of refund of tax for bad debts has been reduced to 4 years from the date of the supply. 
  5. Keeping of records. Prior to the passage of the Act, the law required every registered person to keep a full and true written record of every transaction for a period of 5 years from the date of the last entry made. This requirement now applies to every person whether registered or not.
  6. Changes in VAT treatment. Several amendments have been to the Value Added Tax Act including standard rating a number of goods and services that were previously either zero-rated or exempt and also exempting a number of items that were previously zero - rated. Some of the goods that are now exempt from VAT include personal protective equipment used by medical personnel or the members of the public in case of a pandemic or a notifiable infection disease and vaccines for human and veterinary medicine and medicaments. The exemption of medicaments and vaccines may lead to increase in prices of these products as the pharmaceutical manufacturers will be unable claim input VAT incurred on their operations. Services such as insurance agency, insurance brokerage, securities brokerage services and asset transfers and other transactions related to the transfer of assets into real estate investment trusts and asset backed securities that were previously exempt from VAT are now subject VAT at the standard rate.
  • Excise Duty Act, 2015

The Excise Duty Act has been amended by applying excise duty on some excisable supplies. These include goods imported or purchased locally for direct and exclusive use in the implementation of projects under special operating framework arrangements with the government, one personal motor vehicle (excluding buses and minibuses of seating capacity of more than eight seats) imported by a public officer returning from a posting in a Kenyan mission abroad and another motor vehicle by his or her spouse and which is not otherwise exempted from excise duty under item 6 of Part A of the Second Schedule. These were previously exempt from excise duty.  

The Miscellaneous Fees and Levies Act, 2016. Two amendments to this Act are noteworthy. First, the Act introduces a processing fee of Kshs. 10,000/= on all motor vehicles excluding motorcycles imported or purchased duty free prior to clearance through customs under the relevant provisions of the East African Community Customs Management Act, 2004. It also imposes an Import Declaration Fee on gifts or donations (excluding motor vehicles) sent by foreign residents to their relatives in Kenya for their personal use, raw materials for direct and exclusive use in construction by developers or investors in industrial parks of 100 acres or more located outside Nairobi and Mombasa and goods imported for the construction of LP gas storage facilities.

Retirement Benefits Act, 1997

The Act generally prohibited the use of scheme funds to make loans to any person but allowed the use of a proportion of the benefits accruing to a member for securing a mortgage loan. In the new amendment, members of retirement schemes have now been allowed to access a portion of their benefits for purchase of residential houses. The draft Retirement Benefits (Mortgage Loans) (Amendment) Regulations, 2020 have now been formulated to specify the requirements and procedures that one would need to follow in order to access the benefits for house purchase. The amendment seeks to provide an avenue for financing the purchase of homes by using savings in retirement benefit schemes.


It is anticipated that the amendments will have a significant impact on doing business in the country. For instance, amendments to the Value Added Tax Act such as removal of exemptions may affect ongoing projects (such as power generation plants and oil exploration companies) that had already been granted VAT exemption. As explained above, other amendments may lead to an increase in cost to consumers. Further, the imposition of VAT on transfer of business as going concern may discourage commercial transactions and internal reorganizations due to the anticipated increased cost of acquisition and restructuring. 

By Audrey Seur


This article is intended for general knowledge only. For substantive legal advice on this, please contact us through This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it.


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