VAT Exemption Policy
What is VAT relief and what makes me eligible to claim it?
VAT is a tax that consumers pay when purchasing services or goods in Kenya. The standard rate for VAT in the UK is currently 16%.
In Kenya, the Value Added Tax (VAT) Act provides certain exemptions for solar products to encourage the uptake of renewable energy and promote sustainable development. The VAT exemption on solar products is primarily governed by the following sections of the VAT Act:
Section 14(1)(e) of the VAT Act: This section exempts from VAT “machinery, equipment, and materials for use in the construction of a power generation plant or grid substation.” Solar panels, solar inverters, and other solar-related equipment used in power generation can fall under this exemption.
Section 15(n) of the VAT Act: This section exempts from VAT “supplies of machinery and equipment for use in the generation of electricity from solar energy.” It covers solar photovoltaic (PV) modules, solar water heaters, solar batteries, and other solar energy generation equipment.
It’s important to note that the VAT exemption policy on solar products may have specific conditions and limitations. For example, some exemptions may only apply to products that meet certain technical specifications or are intended for specific uses related to power generation or construction. Additionally, VAT exemption may not apply to services, installation costs, or maintenance-related expenses.
To determine the exact eligibility and conditions for VAT exemption on solar products in Kenya, it is advisable to refer to the latest version of the VAT Act, consult with the Kenya Revenue Authority (KRA), or seek guidance from a qualified tax professional familiar with the local tax regulations.
Remember to verify any recent updates or changes to the VAT exemption policy on solar products to ensure accurate and up-to-date information