Kenya cuts the VAT bad-debt refund waiting period from three years to two
This page records one dated change. For the rules in Kenya as they stand today, see the Kenya guide →
- Jurisdiction
- Kenya
- Tax
- VAT
- Change type
- Compliance
- Status
- In force
- Impact
- FYI
- Announced
- 27 June 2025
- Effective
- 1 July 2025
- Authority
- National Council for Law Reporting (Kenya Law)
- Verified
- Fetched from official source · high confidence
VAT-registered persons in Kenya claiming a refund of VAT on a bad debt.
No action — monitoring only.
Finance Act 2025 (Act No. 9 of 2025, in force 1 July 2025), s.35, amends VAT Act s.31(1)(a): cuts the waiting period before a registered person may claim a VAT bad-debt refund from three years to two years from the date of supply; inserts proviso (ca) allowing the amount to be offset against other VAT liabilities on the Commissioner's approval; and deletes provisos (d) and (e).
What changed in detail
Section 35 of the Finance Act, 2025 (No. 9 of 2025, Kenya Gazette Supplement No. 104; assented 27 June 2025; in force 1 July 2025) amends section 31(1) of the VAT Act, CAP 476, which allows a registered person to claim a refund of VAT on a bad debt.
- In paragraph (a), it replaces “three years” with “two years”, so the waiting period after the date of supply before a bad-debt refund can be claimed falls to two years.
- In the proviso, it inserts paragraph (ca): the amount may be used to offset any other VAT liability, upon approval by the Commissioner.
- It deletes paragraphs (d) and (e) of the proviso.
What it means
This change is superseded. The Finance Act 2026 restored the three-year period from 1 July 2026 (ke-bad-debt-refund-three-years-2026), so the two-year rule applied for one year only. It still matters for claims made between July 2025 and June 2026, which rest on this provision, and for the offset route in proviso (ca): check whether a claim or offset approved in that year sits on the two-year basis before relying on it in an audit.
Proof
in paragraph (a), by deleting the words “three years” and substituting therefor the words “two years”
Source snapshot of the official page. Open full size ↗Archived from the official distribution · The Finance Act, 2025 (No. 9 of 2025), Kenya Gazette Supplement No. 104, 27 June 2025 · kenyalaw.org