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Section 2

Interpretation

(1) In this Act, unless the context otherwise requires—

“aircraft” includes every description of conveyance for the transport by air of human beings or goods;

“assessment” means –
  • (a) a self-assessment return submitted under section 45; 
  • (b) an assessment made by the Commissioner under section 45; or 
  • (c) an amended assessment under section 46; 
“Authority” means the Kenya Revenue Authority established by the Kenya Revenue Authority Act;

“authorised officer”, in relation to any provision of this Act, means any officer appointed under section 3 who has been authorised by the Commissioner to perform any functions under or in respect of that provision;

“business” means-
  • (a) trade, commerce or manufacture, profession, vocation or occupation; 
  • (b) any other activity in the nature of trade, commerce or manufacture, profession, vocation or occupation; 
  • (c) any activity carried on by a person continuously or regularly, whether or not for gain or profit and which involves, in part or in whole, the supply of goods or services for consideration; or 
  • (d) a supply of property by way of lease, licence, or similar arrangement, 
but does not include-
  • (i) employment; 
  • (ii) a hobby or leisure activity of an individual; or 
  • (iii) an activity of a person, other than an individual, that if carried on by an individual would come within sub-paragraph (ii);
“Cabinet Secretary” means the Cabinet Secretary responsible for matters relating to finance;

 Cap. 469 
“Commissioner” means the Commissioner-General appointed under the Kenya Revenue Authority Act, or, with respect to powers or functions that have been delegated under that Act to another Commissioner, that other Commissioner;

Cap. 486 
“company” means a company as defined in the Companies Act or a corporate body formed under any other written law, including a foreign law, and includes any association, whether incorporated or not, formed outside Kenya which the Cabinet Secretary may, by order, declare to be a company for the purposes of this Act;

Finance Act, 2019Effective 7th November 2019 
“concessional loan” means a loan with at least twenty-five percent grant element. 

Finance Act, 2015Effective 12th June 2015 
“duty-free shop” means a bonded warehouse licensed by the Commissioner of Customs for the deposit of dutiable goods on which duty has not been paid and which have been entered for sale to passengers departing to places outside Kenya;

“duty of customs” means import duty, excise duty, export duty, countervailing duty, levy, cess, tax or surtax charged under any law for the time being in force relating to customs or excise;

Finance Act, 2018Effective 1st July 2018 
“electronic notice system” has the meaning assigned to it in section 39; 

“exempt supplies” means supplies specified in the First Schedule which are not subject to tax;

Finance Act, 2016Effective 1st July 2016 
“export” means to take or cause to be taken from Kenya to a foreign country, a special economic zone enterprise or to an export processing zone;

Cap. 517 
“export processing zone” means an export processing zone designated under the Export Processing Zones Act;

“goods” means tangible movable and immovable property and includes electrical or thermal energy, gas and water, but does not include money;

Finance Act, 2016 Effective 1st July 2016 
“hotel” includes premises commonly referred to as “service flats”, “service apartments”, “beach cottages”, “holiday cottages”, “game lodges”, “safari camps”, “bandas” or holiday villas” and other premises or establishments used for similar purposes, but does not include—
  • (i) premises on which the only supply is under a lease or licence of not less than one month, unless the agreement relating thereto provides that by prior arrangement the occupier may, without penalty, terminate the lease or licence on less than one month’s notice; or 
  • (ii) premises operated by an educational or training institution approved by the Cabinet Secretary for the time being responsible for education for the use of the staff and students of that institution; or 
  • (iii) premises operated by a medical institution approved by the Cabinet Secretary for the time being responsible for health, for the use of the staff and students of that institution;
“information technology” means any equipment or software for use in storing, retrieving, processing or disseminating information;

Finance Act, 2016Effective 1st July 2016 
“importation” means to bring or cause to be brought into Kenya from a foreign country, a special economic zone enterprise or from an export processing zone;

“importer”, in relation to goods, means the person who owns the goods, or any other person who is, for the time being, in possession of or beneficially interested in the goods at the time of importation;

“input tax” means -
  • (a) tax paid or payable on the supply to a registered person of any goods or services to be used by him for the purpose of his business; and 
  • (b) tax paid by a registered person on the importation of goods or services to be used by him for the purposes of his business; 

Finance Act, 2017Effective 3rd April 2017 
“Islamic finance arrangement” has the meaning assigned to it in section 2 of the Income Tax Act;

Finance Act, 2017Effective 3rd April 2017 
“Islamic finance return” has the meaning assigned to it in section 2 of the Income Tax Act 

“money” means –
  • (a) any coin or paper currency that is legal tender in Kenya; 
  • (b) a bill of exchange, promissory note, bank draft, or postal or money order; 
Finance Act, 2015Effective 12th June 2015 
  • (c) any amount provided by way of payment using a debit or credit card or electronic payment system; 

Finance Act, 2016Effective 1st July 2016 
“non-resident person” has the meaning assigned to it in section 9; 

“official aid funded project” means a project funded by means of a grant or concessional loan in accordance with an agreement between the Government and any foreign government, agency, institution, foundation, organization or any other aid agency;

“output tax” means tax which is due on taxable supplies;

“person” means an individual, company, partnership, association of persons, trust, estate, the Government, a foreign government, or a political subdivision of the Government or foreign government;

Finance Act, 2016Effective 1st July 2016 
“registered person” means any person registered under section 34, but does not include an export processing zone enterprise or a special economic zone;

“regulations” means any subsidiary legislation made under this Act;

“services” means anything that is not goods or money;

“service exported out of Kenya” means a service provided for use or consumption outside Kenya;

“ship stores” means goods for use in aircraft or vessels engaged in international transport for consumption by passengers and crew and includes goods for sale on board such aircraft or vessels;

Finance Act, 2016Effective 1st July 2016 
“Special economic zones” shall have the meaning assigned to it under the Special Economic Zones Act, 2015.

Finance Act, 2017 Effective 3rd April 2017 
“Sukuk” has the meaning assigned to it in section 2 of the Public Finance Management Act, No 18 of 2012

“supply” means a supply of goods or services;

“supply of goods” means –
  • (a) a sale, exchange, or other transfer of the right to dispose of the goods as owner; or 
  • (b) the provision of electrical or thermal energy, gas or water; 
“supply of services” means anything done that is not a supply of goods or money, including –
  • (a) the performance of services for another person; 
  • (b) the grant, assignment, or surrender of any right; 
  • (c) the making available of any facility or advantage; or 
  • (d) the toleration of any situation or the refraining from the doing of any act;
 “supply of imported services” means a supply of services that satisfies the following conditions –
“tax” means the value added tax chargeable under this Act;

“tax computerized system” means any software or hardware for use in storing, retrieving, processing or disseminating information relating to tax;

“tax period” means one calendar month or such other period as may be prescribed in the regulations;

“tax registration certificate” means a tax registration certificate issued by the Commissioner under section 34;

Finance Act, 2016 Effective 1st July 2016 
“tax representative” means a tax representative appointed under section 9;

 “taxable supply” means a supply, other than an exempt supply, made in Kenya by a person in the course or furtherance of a business carried on by the person, including a supply made in connection with the commencement or termination of a business.

“taxable value” means the value determined in accordance with section 13 and 14;

“vehicle” includes every description of conveyance for the transport by land of human beings or goods;

“zero-rated supply” means a supply listed in the Second Schedule.

(2) For the purposes of this Act, goods shall be classified by reference to the tariff numbers set out in Annex 1 to the Protocol on the Establishment of the East African Community Customs Union and in interpreting that Annex, the general rules of interpretation set out therein shall, with the necessary modifications, apply.

Finance Act, 2017 Effective 3rd April 2017 
(3) For the purposes of this Act-
  • (a) Islamic finance return is treated as interest, whether received or paid on a financial arrangement; and 
  • (b) Reference to “interest” includes a reference to Islamic finance return.

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