📌 Introduction: Struggling With Excess Input VAT?
Do you regularly make purchases and pay VAT, but your sales are zero-rated or exempt?
Or maybe you made an overpayment or amended a return?
👉 If so, you may be eligible for a VAT refund from the Kenya Revenue Authority (KRA).
But there’s a catch — the process can be paper-heavy, time-bound, and strictly reviewed.
This guide breaks it all down — the who, when, how, and what you need in 2025.
🧾 What Is a VAT Refund?
A VAT refund is a reimbursement by KRA of excess input VAT that cannot be offset against output VAT.
You may be eligible if:
- You are an exporter of zero-rated goods or services
- You consistently incur more input VAT than output VAT
- You overpaid VAT or made corrections to returns
Governed under Sections 17(5) and 35–37 of the VAT Act, plus KRA’s iTax VAT refund module.
✅ Who Qualifies for a VAT Refund?
Here’s a breakdown of qualifying situations:
| Scenario | Refund Eligibility |
|---|---|
| Exporters (zero-rated) | ✅ Yes |
| Suppliers to diplomatic missions | ✅ Yes |
| Overpayment or duplicate payment | ✅ Yes |
| Input VAT exceeding output VAT | ✅ Maybe (if consistent 3+ months) |
| Exempt-only businesses | ❌ No refund allowed |
KRA will require proper documentation before approving any claim.
📅 Time Limit to File VAT Refund in 2025
🕒 You must apply for a refund within 12 months from:
- The date the overpayment arose
- The last date of the relevant tax period
📑 Documents Required for a VAT Refund Claim
Prepare these before starting:
- Original invoices (VAT-compliant with eTIMS if applicable)
- Customs documentation (if imports are involved)
- Schedules of input and output VAT
- Bank statements (matching payments)
- Export documents (for zero-rated goods)
- Certified copies of supplier PINs and compliance
- Any amended returns or correction confirmations
📌 Attach documents in PDF format during the iTax application.
🖥️ Step-by-Step: How to Apply for VAT Refund on iTax (2025)
🪜 Step 1: Log into iTax
Visit itax.kra.go.ke, log in with your PIN and password.
🪜 Step 2: Navigate to VAT Refund Application
Go to:
Refund → VAT → Create VAT Refund Application
🪜 Step 3: Select Reason
Choose the refund reason (e.g., export zero-rated, overpayment, excess input).
🪜 Step 4: Enter Details
Input relevant return period, amount, and description.
🪜 Step 5: Upload Attachments
Attach all required supporting documents (PDF only).
🪜 Step 6: Submit
Submit the application. A tracking number and acknowledgment will be generated.
🪜 Step 7: Monitor Progress
Check the status under “View Refund Applications.” Respond promptly to any KRA query letters.
📊 Table: Common Refund Scenarios
| Business Type | Refund Likely? | Notes |
|---|---|---|
| Exporter | ✅ Likely | Provide export evidence |
| Service provider to NGO | ✅ | Needs exemption certificate |
| Overpaid VAT | ✅ | Must prove excess |
| Exempt-only supplier | ❌ | Not eligible |
| Late application (>12 months) | ❌ | Rejected automatically |
❌ Why VAT Refund Claims Get Rejected
- Incomplete or missing documents
- Claims filed after the 12-month deadline
- Errors in invoice or supplier PINs
- Incorrect refund reason selected
- VAT return inconsistency (e.g., unfiled returns)
📉 Penalties for False or Fraudulent Claims
Under the Tax Procedures Act, any false claim may lead to:
- 75% penalty on tax evaded
- Prosecution
- Blacklisting from future refunds
👉 Always ensure your records and documentation are accurate and honest.
💡 Tips to Speed Up Approval
- Use KRA eTIMS to auto-match invoice data
- Attach full PDF bundles, labeled by section
- Provide supplier compliance proofs upfront
- Reconcile refund figures with VAT returns
🧠 FAQs
Q1: How long does a refund take?
Typically 90–120 days, depending on audit complexity.
Q2: Can I claim input VAT on capital goods?
Yes, if properly classified and business-related.
Q3: What if my refund is rejected?
You can appeal via the Tax Appeals Tribunal or request a review.
Q4: Are refunds taxable?
No — the refunded VAT is not additional income.
Q5: Can I carry forward instead of claiming?
Yes. Some businesses opt to carry forward to offset future VAT obligations.
📣 Conclusion: Don’t Let VAT Weigh You Down
VAT refunds are your right, but claiming them requires discipline, documentation, and follow-up.
Don’t miss out on thousands stuck in your input credits.
✅ Ready to file your first refund?
✅ Need help preparing the documents?
👉 Reach out to Ushuru.com for expert assistance and checklists.