THE VALUE ADDED TAX (AMENDMENT) BILL, 2025
Status Timeline
Proposed
Active now
Public Review
Pending
Debate
Pending
Executive
Pending
Final
Pending
Retrospective Effective Date
Once enacted, the provisions of the Act are deemed to have come into operation retrospectively on 27th December, 2024.
Exemption Timeline Clarified
The Bill deletes the phrase "twelve months after this date" and substitutes it with "twelve months from the date of commencement of this Act" in Paragraph 146 of Part I of the First Schedule. This resolves ambiguity regarding when the tax exemption officially expires.
Applies to KSh 2 Billion Investments
The clarified exemption timeline specifically impacts capital goods exemptions granted before 1st January, 2024, for manufacturing sector investments valued at not less than KSh 2 billion.
Bill No.
No. 11 of 2025
Gazette No.
Supplement No. 40
Sponsor
Kimani Ichung'wah
Background
The Value Added Tax (Amendment) Bill, 2025 addresses a draft ambiguity in the First Schedule of the Value Added Tax Act (Cap. 476). Currently, the schedule provides a VAT exemption for certain capital goods to promote investment in the manufacturing sector but contains ambiguous phrasing regarding the expiration date of the exemption.
Key Amendments
- Amendment of Cap. 476: The Bill amends Paragraph 146 of Part I of the First Schedule to the Value Added Tax Act.
- Timeline Substitution: It deletes the phrase "twelve months after this date" and replaces it with "twelve months from the date of commencement of this Act" to clearly define when the twelve-month exemption period runs.
New Obligations
The Bill does not introduce new obligations, but clarifies the scope of existing exemptions. To qualify for the capital goods VAT exemption, the manufacturing investment must meet the following criteria:
- The value of the investment must be at least KSh 2 billion.
- The exemption must have been granted before 1st January, 2024.
Transitional Provisions
- Retrospective Commencement: Section 1 of the Bill states that the Act shall be deemed to have come into operation on 27th December, 2024.
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