Clarification on VAT refund claims by Oil and Gas Subcontractors

PUBLIC NOTICES 03/12/2019

Kenya Revenue Authority (KRA) informs the public and in particular, oil and gas subcontractors that:

The services offered by subcontractors to oil and gas exploration companies which had remission on VAT payable under section 23 of the repealed VAT Act Cap 476 were taxable at general rate except that they enjoyed special remission under transitional provision, section 68(4) of VAT Act, 2013 which was valid upto 31st August 2018. However Subcontractors have been lodging VAT refund claims assuming that their supplies are zero rated entitling them to VAT refunds.

Supplies made to oil and gas exploration companies by subcontractors are not exempt under First Schedule or zero rated under the Second Schedule of the VAT Act, 2013.

Such supplies are not exempted in the Second and the Third schedule of the repealed VAT Act, Cap 476 or zero rated under the Fifth and Eighth Schedule of the repealed VAT Act.

Input tax incurred by the subcontractors may be deducted from their output tax subject to the provisions of section 17 of the VAT Act, 2013 and the regulations.

There is no provision in the repealed VAT Act, Cap 476 or VAT Act, 2013 which authorize the subcontractors to lodge a VAT refund claim under this circumstance

For clarification please contact the Contact Centre on Tel. Number: 020 4 999 999; 0711 099 999 or Email: callcentre@kra.go.ke. You may also visit the nearest KRA Office or Huduma Centre.

Commissioner for Domestic Taxes