How To Evaluate The Best VAT Software In Kenya

Electronic Tax Invoice in Kenya
Tally Solutions | Updated on: November 14, 2022

A business in Kenya should factor in Value Added Tax VAT into their books of accounts for compliance. This is a tax that is applied to taxable goods or services in Kenya and also on imported taxes and services into the country. Accounting software that is unable to compute VAT properly and create the required reports for filing would be incomplete.

What is VAT software?

VAT software is an accounting or ERP software that is able to properly apply and account for VAT on the applicable goods and services. It is important that VAT compliant software be used in a company so that there is all-around compliance. When you use software that has no VAT features, you will have to manually compute and add VAT to every calculation. This would defeat the entire purpose of computerisation.

Personalise the Business Reports the Way You Want

TallyPrime: An Overview

Choosing the right VAT software for your business ensures that you maintain your records completely and easily. It also makes the regular filing of returns in accordance with the regulations very easy. If you do not use VAT software, you stand to lose your reputation in case of non-compliance issues. You will also take a longer time to manually process VAT calculations and generate reports and invoices.

Business operations are easier and error-free when accounting software is able to factor in all the necessary regulatory computations. Instead of having to perform the extra steps of calculating the VAT over and above the calculations of the software, everything gets calculated and updated automatically.

Not being VAT compliant increases your risk of being at odds with the authorities. It is essential that the books of accounts and all transactions be maintained in accordance with the laws. Almost all businesses in Kenya have implemented the complete use of VAT in all their transactions. It is essential that accounting software also be updated to reflect the current norms in the country.

5 Things to consider in evaluating the VAT software

Quick and easy VAT set-up

Kenya has three applicable slabs for the computation of VAT. In order to properly compute the VAT, the chosen software system should allow a very easy setup of VAT. Tally allows you to enable VAT for the accounting system.

It is essential that the VAT applicable should be highly customisable in the software. The VAT applicable, percentage and the goods and services that attract VAT are bound to be changed over time. If you choose software that does not allow you to change the VAT, it will become obsolete when regulations are changed. This would mean a further expense in order to update or buy new software. There will also be a time lag to implement the changes.

When you choose software such as Tally, the VAT can be set up in minute detail. If there are any regulatory changes they can be implemented quickly and easily. The changes will be reflected across all further transactions in the system easily. So, staying compliant with the regulations becomes effortless.

Accurate invoices and supports different types of transactions

It is essential that all the invoices that are generated by the software are complete and accurate in every way. If your accounting software generates a faulty invoice with an error, it could attract penalties and action for non-compliance with the law. It is vital that all invoices that are generated use the exact VAT slab that is set for each product and service in the manner set out by the regulations. The software should be able to intelligently apply VAT across different types of transactions easily.

Prevention, error detection and correction capability

There are many errors that can creep into your accounting system. The accounting software should be able to recognise and indicate errors that might be caused by the users. Sometimes, the error is outside the scope of the software. In that case, when the error is detected, the accountant should be able to correct it and set the books of accounts right easily. A system that does not allow corrections is one that would be troublesome in a real-life scenario.

Accurate VAT return filing

It is essential to select an accounting software such as Tally that can be configured to generate the tax details in the exact prescribed Excel format for submission. When details are manually entered into the Excel format, there may be errors that creep in. But an automated generation of the format is error-free and also very quick. If there are any corrections detected, they can be set right and the accurate report generated for filing. This ensures that you file your taxes accurately and promptly every time.

The government has made the filing of taxes easier for people and businesses. Using properly designed VAT software makes the generation of the filing spreadsheets also very easy. They help all entities comply with the tax regulations effortlessly.

Integrates accounting, inventory and VAT in the same software

VAT is applied on transactions that are a part of many different functions in the company. When the computerisation of all of them is through isolated systems, it makes the generation of tax reports a nightmare. When you use ERP software that is VAT enabled, you can calculate VAT and maintain records of all transactions across inventory and accounting. Since the purchase of items is triggered through the inventory department of a company, the VAT software would be incomplete if it only accounts for VAT in the accounting software and not in inventory-related invoices and reports. For a truly automated generation of VAT reports, an end-to-end VAT software solution is required. If there is a disconnect between the different modules of the software, there may be the risk of non-compliance with the VAT laws. Even if there is compliance, an inadvertent error in data entry or calculations across the modules could lead to non-compliance. This would reflect poorly on the company’s reputation and attract action from the authorities.

The best VAT software  choice

In summary, the best choice for  VAT software in Kenya would be e allows quick and easy VAT set-up, multiple transaction types, accurate invoicing, error detection and correction as well as integration of inventory and accounting in the software. It also generates the reports that you need for filing quickly and accurately.


Inspired by the way you work, Tally is designed to delight you.