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Tax Implications for Exporting Goods and Services from Kenya

As a business in Kenya looking to export goods or services, it’s important to understand the various tax implications to ensure compliance and avoid unexpected costs. Here are the key tax considerations:

1. Export Duties and Levies

Most goods exported from Kenya do not attract export duties. However, some select items like hides and skins, scrap metal, and oil products are subject to export levies as outlined in the Miscellaneous Fees and Levies Act, 2016

2. Import Duties in Destination Country

While exports from Kenya may be exempt from duties, the importing country may impose its own tariffs. These vary widely depending on the HS code of the product and any trade agreements between Kenya and the destination country

3. Value Added Tax (VAT)

Goods exported from Kenya are zero-rated for VAT purposes. This means no VAT is charged on exports, and the exporter can claim back any input VAT incurred

For services, the VAT treatment depends on the place of use or consumption of the service:

  • If the service is provided to a client outside Kenya for use/consumption outside Kenya, it qualifies as an exported service and is zero-rated
  • However, if any part of the service is consumed in Kenya, even if the client is foreign, 16% VAT applies
  • There has been some uncertainty on this provision, with disputes between taxpayers and the Kenya Revenue Authority (KRA). Exporters need to carefully evaluate the VAT treatment of their services

4. Income Tax

  • Profits from exported goods or services are subject to standard corporate income tax at 30% for local companies, or 37.5% for branches of foreign companies  
  • Companies in Export Processing Zones (EPZs) enjoy a reduced corporate tax rate of 0% for 10 years and 25% for the next 10 years  

5. Withholding Tax

Payments to non-resident persons for management, professional, or training services provided to Kenyan companies are subject to withholding tax at 20%

6. Double Taxation Agreements (DTAs)

Kenya has DTAs with several countries that can provide relief from double taxation. However, these mainly apply to income taxes and may not cover VAT or other indirect taxes

To ensure compliance, exporters should:

  • Properly classify their goods/services and determine the applicable taxes
  • Register for relevant export licenses and permits
  • Maintain clear documentation of export sales and expenses
  • Use a reputable freight forwarder or customs agent
  • Consult a tax professional for guidance

Useful links for more information: