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Tax & Compliance · Definition

Value Added Tax

A consumption tax charged on sales and reclaimable on qualifying purchases.

VAT is charged by registered businesses on taxable supplies (output tax) and reclaimed on qualifying purchases (input tax). You remit the difference, so the tax is ultimately borne by the final consumer.

The mechanism only works if invoices are compliant. A purchase invoice missing the supplier’s registration details or the correct tax breakdown may not support an input claim, turning recoverable tax into cost.

How it is calculated

VAT payable = Output tax on sales − Input tax on purchases

Exempt and zero-rated supplies are treated differently — zero-rated still allows input recovery.

Also called

  • VAT
  • sales tax
  • GST

See it in AWRA OpsHub

eTIMS & Tax Compliance

Related terms

E-Invoicing

Issuing invoices in a structured electronic format, often validated by the tax authority.

eTIMS

Kenya’s electronic tax invoice management system for real-time invoice transmission.

Zero-Rated Supply

A taxable supply charged at 0% VAT, with input tax still recoverable.

Withholding Tax

WHT

Tax deducted at source from a payment and remitted on the payee’s behalf.

More in Tax & Compliance

Anti-Bribery Compliance Audit Trail Data Protection Compliance Internal Control ISO Standards KRA PIN Non-Conformance Report (NCR) Retention Policy

Value Added Tax is not just a definition here

Tax & Compliance runs on this vocabulary every day in AWRA OpsHub — 17 of our 257 glossary terms describe things the platform actually does.

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