Streamlining Operations: How the Best Business Management VAT Software Boosts Efficiency in Kenya

Gauri Sachan | Updated on: March 22, 2024

In Kenya, VAT (Value Added Tax), a tax levied on goods and services provided or imported, is in place. This means no business can sidestep filing VAT to the government. 

When it comes to making VAT calculations and filing them, VAT business software can be a game changer. It can help businesses not only carry out their VAT-related complex tasks but also help them comply with government regulations. This can help them be more efficient and improve their bottom line.  

In this blog, we have shed light on the current VAT structure in Kenya, the features of good VAT business software, and how it can help your business. 

After reading this, you will have a clear idea of what you should watch out for when investing in VAT software for yourself.

Current VAT structure in Kenya

The Kenya Revenue Authority (KRA) devises the VAT regulations in the country. If your business sells goods or services worth a minimum of 5,000,000 KES (Kenyan Sterling), you should register for VAT and file your returns every month on time. 

The three types of VAT rates in Kenya currently are:

  • For all goods & services and imports that are taxable – 16%
  • For local fuel, petroleum, oil and other related products – 8%
  • For exports, supplies sent to government agencies and diplomats, and transport of international passengers – 0%

As you can see, every month, Kenyan businesses should add VAT details to their books of accounts for accurate reporting of transactions. However, doing it manually will take a lot of time and can lead to errors as well. 

This is where sophisticated VAT software comes in, helping you calculate the different VAT rates on different products automatically. This way, you can get the exact returns you have to file every month and free yourself from issues like late payment and penalties. 

What features should VAT software have?

Good VAT business software should have the following features to make your job easier, more accurate, and more streamlined:

  • Easy setup – The software should be easy to set up and use. Using it should be naturally easy for you, allowing you to navigate through its features without thinking much about it. 
  • Compatible with all types of transactions – The VAT software should meet the latest Kenyan VAT regulations. Every invoice generated should include a VAT column, with rates applicable to the different types of products. This makes calculation automatic and error-free.
  • Quick detection and correction of errors – Errors in manual entries can make the software take the wrong details as the base. That said, it should be sophisticated enough to detect these errors when reconciling accounts and inform the user about the same. It should also be able to accept edits so the errors can be corrected and the system can be fed accurate figures for further processing.
  • Accurate and on-time VAT returns filing every time – Sophisticated VAT software needs to file accurate and timely VAT returns every time. Failure to do so can attract penalties, as defined by the KRA. Using the right business management VAT software like TallyPrime can save you a lot of time in manual entries and help you file VAT returns quickly and on time.
  • Compatibility to collaborate with other business operations – All the operations within your business are interrelated. Hence, your VAT software should seamlessly integrate with your existing business software.

For example, when VAT-compliance features are integrated with an accounting and inventory management tool, tax/VAT rates calculation becomes a lot easier. The system identifies the nature of inventory as soon as it enters the warehouse, while the VAT feature automatically applies the appropriate VAT on them when recording transactions.

These are the ideal features popular business management VAT software tools like TallyPrime offer. If you are looking for one for your business, we recommend you not compromise on these features at all. 

Some software tools may come at an attractive price, but they may not have all these features, defeating the purpose of investing in VAT software. 

Advantages of VAT software

Why should companies in Kenya and other countries, where VAT is currently in practice, prioritize finding a good business management VAT software? Because it can provide them with the following benefits:

  • Efficiency in VAT calculations, as processes are automated and free of manual errors
  • Provisions for real-time corrections are possible
  • Seamless integration into already existing business models
  • Automatic VAT rates population feature for different products/services, as advised by the Government
  • Data  privacy and security are guaranteed as access to the software is limited
  • Easy to navigate features, and perfect to be used even by a beginner with basic accounting expertise

Bottom line

If you run a business in Kenya, you must opt for software that enables you to do quick and accurate VAT calculations. With the current VAT regulations in place in the country, your business can be severely impacted if you don’t file VAT returns on time. Penalties and late filing of returns can cause a huge dent in your reputation as well.

As different types of products/services attract different types of VAT rates, it would be hard for you to account for all these manually. This is why it is a good idea to invest in trustworthy VAT-enabled business software such as TallyPrime for accurate and on-time filing of VAT returns, every time.


Compliance solutions right from invoicing to filing accurate VAT returns.