Set a customer price including 16% VAT and back out your net revenue.
VAT-inclusive customer price
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Net revenue you keep
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VAT portion
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Quote the price the customer pays, not the price you keep
If you are VAT registered in Kenya, the number on your quote and the number that reaches your bank account are not the same. VAT sits on top of your price, you collect it from the customer, and you hand it to the Kenya Revenue Authority. The trap is quoting your target revenue as the headline price, then discovering that VAT has to come out of it. This tool runs the calculation the right way round: you tell it what you want to keep, and it tells you what to put on the invoice so that, after you remit the tax, your target survives intact.
It is built for service providers and small sellers who think in terms of takings rather than tax. A consultant who wants KES 100,000 for a piece of work, a workshop owner pricing a repair, a designer sending a quote, all of them need the gross figure to show the client and the net figure to plan around. Getting that split right at the quoting stage prevents the most expensive surprise in small business: realising at filing time that the VAT was never really yours.
Adding VAT, and backing it out again
Two formulas do all the work, and they are mirror images. To add VAT, multiply your net target by 1.16, since the rate this calculator applies is 16 percent. To pull VAT back out of a price that already includes it, multiply the gross by 16 divided by 116. That second fraction is the one people get wrong. The VAT inside a tax-inclusive price is never 16 percent of the whole price; it is 16/116 of it, because the 16 percent was added to the net, not to the gross. Confirm the standard rate with the KRA before relying on it, as Kenya has revised VAT rates and the list of standard, zero, and exempt supplies more than once in recent Finance Acts.
Turning a KES 8,000 target into an invoice
Say you want to keep KES 8,000 net on a job. Here is the price to quote and the VAT buried inside it, using the rate this calculator applies.
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The chart in the results panel shows the customer price split into the net revenue you keep and the VAT portion you hold for the KRA until your next return.
The mistake that quietly costs you. A new business quotes KES 8,000, the client pays KES 8,000, and the owner spends it all. At filing time the KRA still wants the VAT on that supply, roughly KES 1,103 backed out of the 8,000, and it comes straight out of pocket because it was never added on top. Quote KES 9,280 from the start and the VAT funds itself. When in doubt, state clearly on the quote whether your price includes or excludes VAT, so neither side is surprised.
Should I show VAT as a separate line on the invoice?
Yes. A compliant tax invoice in Kenya shows the net amount, the VAT charged, and the gross total separately, along with your VAT registration number. Customers who are themselves VAT registered need that breakdown to reclaim their input VAT, and the KRA expects it. Showing only the gross figure makes your invoice harder to use and can hold up your customer's own filing.
What if my product is zero-rated or exempt?
Then this tool does not apply in the same way. Zero-rated supplies, such as exports and certain essentials, carry VAT at 0 percent, so the gross equals the net and you can still reclaim input VAT. Exempt supplies carry no VAT but also block input VAT recovery. Check which category your specific goods or services fall into with the KRA, because the lists change and the difference between zero-rated and exempt matters a great deal to your cash position.