What a VAT return is and who files it
A VAT return declares the VAT you charged customers (output VAT) and the VAT you paid suppliers (input VAT) for a month. You pay KRA the difference (output minus input), or carry forward a credit if input exceeds output. Only VAT-registered businesses file VAT returns; registration is required once turnover reaches the threshold (KES 8 million a year under the Finance Act 2025) and is optional from KES 5 million.
VAT returns are monthly and due by the 20th of the following month. Because VAT is transaction-based, your return should reconcile exactly with your eTIMS data: every sale you invoiced and every purchase you received an invoice for.
This is why eTIMS and VAT are tightly linked. When your sales issue compliant eTIMS invoices with correct tax types, your output VAT is already calculated and your return practically fills itself.
How to file a VAT return on iTax, step by step
Follow these steps each month by the 20th.
- 1
Step 1: Log in and open the VAT return
Log in to itax.kra.go.ke, go to Returns, File Return, and select the VAT obligation and the month you are filing.
- 2
Step 2: Declare output VAT (sales)
Enter your taxable sales and the VAT charged. This should match the eTIMS invoices you issued, split by tax type (16%, zero-rated, exempt).
- 3
Step 3: Declare input VAT (purchases)
Enter purchases from VAT-registered suppliers and the VAT you paid, supported by their eTIMS invoices showing your PIN.
- 4
Step 4: Validate the return
The iTax VAT template validates your entries. Output minus input gives the VAT payable or the credit to carry forward.
- 5
Step 5: Submit and get the acknowledgement
Upload and submit the validated return. Keep the acknowledgement receipt.
- 6
Step 6: Pay by the 20th
If VAT is payable, generate the e-slip and pay by M-Pesa, bank or agent before the 20th. Late payment attracts penalties and interest.
Common VAT filing mistakes
Output VAT not matching eTIMS
If your declared sales VAT does not match your transmitted eTIMS invoices, KRA can flag it. Your output VAT should equal your eTIMS sales data.
Claiming input VAT without a valid invoice
You can only claim input VAT on purchases backed by a compliant supplier eTIMS invoice showing your PIN. Claims without one are disallowed.
Wrong tax types
Treating zero-rated or exempt items as standard (or vice versa) distorts the return. Correct item codes and tax types keep it accurate.
Missing the 20th
VAT is due by the 20th of the following month. Late filing or payment attracts penalties (commonly KES 10,000 or 5% of the tax, whichever is higher) plus interest.
Forgetting to file in a nil month
If you were registered but had no sales, you still file a nil VAT return for the month. Not filing attracts a penalty.
A supermarket reconciles VAT automatically
A supermarket in Mombasa with thousands of lines struggled to file VAT: matching sales to the right tax types and reconciling input VAT from suppliers was a monthly ordeal that rarely balanced.
Once every sale issued an eTIMS invoice with the correct item code and tax type, the output VAT was calculated automatically and reconciled. Input VAT was supported by supplier eTIMS invoices.
The monthly VAT return then matched the eTIMS data exactly, filing took a fraction of the time, and the owner stopped fearing an audit because the numbers were demonstrably correct.
Trading without eTIMS-compliant tax invoices risks KRA penalties, blocked VAT input claims for your customers, and receipts a business buyer cannot expense.
Veira signs every sale to KRA eTIMS automatically, so each receipt is compliant the moment it prints, with no separate device to reconcile.
How Veira makes VAT returns reconcile
Veira issues a compliant eTIMS invoice on every sale with the correct item code and tax type, so your output VAT is calculated as you sell and your VAT return reconciles with your eTIMS data automatically. No manual rebuilding, no mismatches that trigger audits.
Your VAT records and eTIMS invoices come from one system, which is exactly what a clean, defensible VAT return needs, from KES 2,999 a month.
Frequently asked questions
How do I file a VAT return in Kenya?
When are VAT returns due in Kenya?
Who has to register for and file VAT?
How does eTIMS affect my VAT return?
Can I claim input VAT on any purchase?
Do I file VAT if I had no sales that month?
VAT returns are simple when your sales already carry correct eTIMS invoices: the output VAT is calculated and the return reconciles itself. Veira makes that automatic from KES 2,999 a month. See how Veira handles eTIMS and file VAT with confidence.