1. Personal Identification Number (PIN)
Personal Identification Number (PIN) is a number which identifies a person for purposes of transacting business with Kenya Revenue Authority, other Government agencies and service providers. Personal Identification Number (PIN) is an Eleven-digit alphanumeric number (e.g. P052246430R).
Force of Law on Having PIN
PIN is a statutory requirement under Section 123 of Income Tax Act (Cap 470 Laws of Kenya). It applies to every person who has income chargeable to tax under the Act or any person whom the Commissioner may so require to have it.
Under Income Tax every Person who has Income chargeable to tax under the Act has to obtain PIN.
Person includes both an Individual as well as Artificial Person (i.e. company, club, Trust etc.).
A Partnership, where the partners are not husband and wife, must obtain PIN.
A sole proprietorship can use the proprietor's individual PIN for all transactions.
2. Registered Person
A Registered Person is one who is registered under VAT Act. Every person who has supplied or expects to supply in the course of his business, taxable Goods/Services exceeding the value of KSh. 5 million (Kenyan shilling) in a twelve month period is required to be registered under the VAT Act.
3. VAT Certificate
It is a certificate issued by the VAT Department to the Registered Person.
As per VAT regulation, the VAT Registration Certificate must be displayed in a prominent place on the business premises. Where there is more than one place of business, certified copies of the Certificate must be displayed at each premise. Copies may be certified by the Commissioner. Failure to do this attracts a default penalty of KSh. 20,000 and a fine of up to KSh. 200,000 and/or imprisonment for up to two years.
4. VAT Registration Number
It is the unique number issued by the VAT Department to the Registered Person. It is an indication that a company is registered for VAT, and the format of registration number allocated will be - 0125178M (7 Numeric and one alpha).
5. Taxable Goods
The goods which are taxable at all levels of distribution. All taxable goods are known as Designated Goods.
6. Taxable Services
The services which are taxable at all levels of distribution
7. Exempt Goods
The Goods that are not taxable (Non-Taxable Goods).
8. Exempt Services
The Services which are outside the list of taxable Services (Non-Taxable Services).
9. Special goods subjected to zero rating
Goods imported or purchased before clearance through the customs or purchased before payment of tax generally or leased, hired or chartered shall be zero rated.
Example: Aircraft Operations, Life Saving Apparatus, Protective Apparel, Clothing Accessories and Equipment etc.
10. Tax Point
Tax point means when tax becomes due and payable to the Commissioner. Tax is due and payable when:
The Supply takes place
An invoice is issued
Part or full payment for the supply is made
A certificate of completion is issued (in case of construction industry)
Whichever of the four comes earliest. A tax payer can however defer payment of tax upto 20th day of the month following that of sale.
11. Input Tax
It is the tax paid to a registered person on the supply of any goods or services to be used for the purpose of business.
Input VAT can only be claimed
On an original tax invoice from a supplier.
Tax paid by a registered person on importing the goods or services to be used for the business.
12. Output Tax
It is the tax collected on sale of goods & services which is due for payment.
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