How to calculate WHT and withheld VAT on a Kenyan invoice
A worked example so you can see the net cash a supplier receives.
This example is for illustration. It assumes a resident consultant invoicing an appointed withholding VAT agent. It uses 5% withholding income tax on professional fees, the rate KRA lists for residents, 16% VAT and 2% withheld VAT on the taxable value. Your own case may differ, for example if the customer is not an agent or the payment type has another rate. Confirm the rates on kra.go.ke first.
- Fee before VAT: KES 100,000.
- VAT at 16%: KES 16,000. Invoice total: KES 116,000.
- Withholding income tax at 5% of KES 100,000: KES 5,000.
- Withheld VAT at 2% of KES 100,000: KES 2,000. Cash received: KES 109,000.
How it works
Write the fee excluding VAT: KES 100,000.
Add VAT at the rate for the supply: 16% gives KES 16,000 and an invoice total of KES 116,000.
Compute withholding income tax on the fee excluding VAT: 5% of 100,000 is KES 5,000.
Compute withheld VAT on the taxable value: 2% of 100,000 is KES 2,000.
Cash paid to the supplier: 116,000 minus 5,000 minus 2,000 equals KES 109,000. The withheld amounts go to KRA and the payer issues certificates.
Legal framework
- Income Tax Act (Cap. 470), withholding provisions.
- Value Added Tax Act 2013 and Tax Procedures Act 2015.
- KRA withholding tax and VAT guidance (kra.go.ke).
Frequently asked questions
Is WHT calculated before or after VAT?
In this example on the amount excluding VAT. Confirm the base for your payment type with KRA.
What if I want to receive a specific net amount?
You can gross up the fee so that the cash after withholding equals your target. Compute it by dividing the target net fee by one minus the withholding rate, and then add VAT. Check the result with your adviser.
What if my customer is not a VAT agent?
Then no VAT is withheld and only withholding income tax, if the payment type is covered, is deducted.
Are these rates fixed?
No. Rates and deadlines have changed in recent Finance Acts. Check the current text before you invoice.
Does 4invoices calculate WHT and WVAT?
No. 4invoices does not compute withholding, produce certificates or report to KRA. It lets you set a VAT rate per line, use any currency with an exchange rate and download a PDF, free for 6 months without a card. You would enter the figures yourself.