Stricter VAT compliance for exports after iCMS–iTax integration

Filing of Value Added Tax (VAT) returns is a statutory requirement for all VAT-registered taxpayers. It requires the accurate declaration of taxable supplies and purchase transactions in line with the provisions of the Value Added Tax Act, 2013. Businesses should maintain proper records and support their declarations with valid documentation, including tax invoices generated through compliant systems such as eTIMS. VAT returns are filed through the iTax platform and should reflect complete, consistent data that aligns with the taxpayer’s accounting records.

Timely submission, accuracy, and proper reconciliation of input and output tax are critical to ensuring compliance and avoiding penalties or disruptions in processes such as VAT refund claims.

The time of supply is a critical tax point for VAT purposes. Following the enactment of the Tax Laws (Amendment) Act, 2024 (Kenya), the treatment of exported goods was revised to provide that the time of supply for such exports arises at the point when a certificate of export, or an equivalent export document, is issued by Customs.

The integration changes how VAT returns are prepared and filed. Export data captured and validated in iCMS will flow directly into the VAT return in iTax and will be pre-filled under zero-rated supplies. As a result, taxpayers will no longer manually enter export values in their VAT returns; the figures will be system-generated from customs records.

The integration covers exports of goods and services, including supplies destined for foreign markets, the Single Customs Territory, Export Processing Zones (EPZs), and Special Economic Zones (SEZs). It also captures export of taxable services through eTIMS-generated invoices. Only export transactions that have been properly validated and matched within the system will appear in the VAT return; incomplete or inconsistent data will be excluded.

The integration should reduce discrepancies, improve transparency and strengthen VAT compliance by matching customs declarations with tax filings.

To minimise compliance risk, exporters should:

• Ensure the exporter’s PIN is correctly captured on export documents.
• Secure Certificates of exports for every consignment shipped
• Reconcile iCMS export records against VAT return data every month.
• Store supporting documents, especially for refund claims and cross-border exports

By cross-checking data across its systems, KRA will be better placed to identify discrepancies such as overstated refund claims or under-declared exports. The change may streamline processing and help speed up legitimate VAT refunds, but it also introduces tighter scrutiny and a higher likelihood of queries where inconsistencies arise.

In practice, exporters will need stronger data governance and internal controls because figures can no longer be adjusted at the VAT filing stage. Getting the source documents right export entries, PIN details, and eTIMS invoices will be critical to smooth compliance and refund processing.

With the new controls in place from May 2026, exporters and clearing agents should review their end-to-end export documentation process to ensure information matches across iCMS, eTIMS and iTax.