VAT (Value Added Tax) vs PAYE (Pay As You Earn): feature by feature
| VAT (Value Added Tax) | PAYE (Pay As You Earn) | |
|---|---|---|
| Who bears the cost | The end customer (you collect it) | The employee (you deduct it) |
| Rate | 16% standard, some 0% or exempt | Graduated bands, up to 35% |
| Filing frequency | Monthly by the 20th | Monthly by the 9th |
| Applies to | VAT-registered businesses above turnover threshold | Any employer with salaried staff |
| Offset available | Yes, input VAT on purchases | Personal relief and SHIF/NSSF deductions |
| Non-compliance risk | Penalties and interest from KRA | Penalties and interest from KRA |
More detail
These are not either/or. A business can owe both VAT (on its sales) and PAYE (on its payroll) and must file each separately to KRA on different deadlines.
A POS handles the VAT side automatically on every sale. The PAYE calculator handles the payroll side per employee per month.
Free tools for this
Frequently asked questions
Do I pay VAT and PAYE to the same place?
Both go to KRA, but on different returns: VAT on the VAT return, PAYE on the PAYE return, each with its own deadline.
What is the VAT rate in Kenya?
The standard rate is 16%. Some goods and services are zero-rated or exempt.
Who must register for VAT?
Businesses whose taxable turnover exceeds the KRA registration threshold. Confirm the current threshold on the KRA website.
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