A taxable person is any individual, partnership, corporate body, or sole proprietorship that is registered, or required to be registered, for VAT.
Registration Thresholds
Registration is governed by statutory monetary limits based on taxable turnover over a specific period (usually 12 months).
- Mandatory Registration: Required when the value of taxable supplies exceeds the legal threshold (e.g., KES 5,000,000 in Kenya). Businesses must apply within the designated statutory timeline (typically 30 days from exceeding the limit).
- Voluntary Registration: Permitted for businesses below the threshold if they make taxable supplies, maintain proper records, and have a fixed place of business. This allows them to recover input tax on capital investments.
The Registration Process and Requirements
To secure a VAT registration number, an applicant must submit:
- National identity or company incorporation certificates.
- Evidence of a physical business location (lease agreements or utility bills).
- Bank account details and a projected turnover statement.
Deregistration and Cancellation
Registration must be cancelled or suspended if the business ceases to make taxable supplies, sells the corporate entity, or if its turnover permanently falls below the voluntary threshold. Upon deregistration, the business must pay output VAT on any remaining commercial stock or capital assets held at that date.
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