VAT for NGOs Leases

Whether VAT is payable on a Lease where a NGO is the Lessee?

The law that governs payment of VAT in Kenya is the Value Added Tax Act, 2013 (hereinafter the “Act”).

Section 5 of the Act provides that a “tax known as value added tax, shall be charged in accordance with the provisions of this Act on a taxable supply made by a registered person in Kenya…”

Part II of the First Schedule to the Act provides a list of services that have been exempted from payment of VAT. Paragraph 8 in particular exempts supply by way of sale, renting, leasing, hiring, letting of land or residential premises. Paragraph 8 further defines residential premises to mean “land or a building occupies or capable of being occupied as a residence, but not including hotel or holiday accommodation”

Where the Lease is over a commercial and not residential in nature, is not exempt from payment of VAT.

Whether the Lessor being a foreign Non- Governmental Organization will be exempt from paying VAT on the Lease?

Non-Governmental Organizations (hereinafter “NGOs) such as the Lessor being an “association of persons” fall under the definition of persons liable to pay VAT under

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