What
is Domestic VAT?
Domestic VAT is VAT charged on goods whose value is four (4) million
shillings and above imported by non VAT registered persons.
When
did Domestic VAT come into effect?
Domestic VAT came into effect 1st March 2001.
Who
has to pay Domestic VAT?
The importer who meets the following criteria:-
- The
importer who is not VAT registered
- The
CIF value (as determined by Customs) of the goods is 4 million
shillings and above
- The
goods must be standard rated.
- The
goods are not personal effects or motor vehicles.
When is Domestic VAT paid?
Domestic VAT is paid at import stage together with the other customs
taxes at the designated banks.
What
value is domestic VAT payable on at importation?
The value is computed by adding a 15% mark up on the Customs VAT
value. The mark up is the expected value added between the stage
of imports and sale. The cuatoms VAT value is the value on which
VAT at Customs is computed. The Customs VAT value is the sum total
of CIF (cost, insurance and freight), import duty and excise duty.
If
I am VAT registered do I pay Domestic VAT?
Domestic VAT is only paid by persons who are NOT VAT registered.
If
I am VAT registered can I de-register and pay only Domestic VAT?
TheVAT Law makes it mandatory for all person whose turnover in any
three months is 12.5 million shillings and above to register for
VAT. Therefore, if you meet this criterion you cannot deregister.
EXAMPLE
OF COMPUTING DOMESTIC VAT
| |
SYMBOL
USED
IN THE
CALCULATION |
CALCULATION |
VALUE |
CIF(cost,
Insurance
& freight) |
A |
A |
4,000,000 |
| 15%
Import Duty |
B |
B
= A X15% |
600,000 |
| Excise
Duty Value |
C |
C = A + B |
4,600,000 |
| 10%Excise
Duty |
D |
D = CX10% |
460,000 |
| Customs
VAT Value |
E |
E
= C + D |
5,060,000 |
| 18%
IMport VAT |
F |
F
= E X18% |
860,200 |
| Domestic
VAT Value |
G |
G
= EX15% |
759,000 |
| 18%
Domestic VAT |
H |
H =GX18% |
129,030 |
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