Kenya exempts goods for PPP and large infrastructure projects from VAT
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
- Update
- Status
- In force
- Impact
- Action required
- Announced
- 23 June 2026
- Effective
- 1 July 2026
- Instrument
- KE-FINACT-19-2026
- Authority
- National Council for Law Reporting (Kenya Law)
- Systems
- Tax engine, ERP, Reporting
- Verified
- Corroborated against official id · medium confidence
Contractors and suppliers on Kenyan public-private partnership infrastructure projects, National Infrastructure Fund projects, and projects with a total investment value of at least KES 3 billion.
Identify qualifying public-private partnership projects, National Infrastructure Fund projects and projects with investment of at least KES 3 billion, obtain the required Cabinet Secretary approvals, and apply the VAT exemption to qualifying supplies.
Tax engineERPReporting
Kenya’s Finance Act, 2026 introduces new VAT exemptions in the First Schedule to the VAT Act, CAP 476: goods for direct and exclusive use in infrastructure projects under a public-private partnership framework, on Cabinet Secretary approval; goods for direct and exclusive use in infrastructure projects undertaken and funded by the National Infrastructure Fund, on National Treasury Cabinet Secretary approval; and plant, machinery, equipment and spare parts imported or purchased locally for a project with a total investment value of at least KES 3 billion, on approval by the Cabinet Secretaries for the National Treasury and for Trade and Investment Promotion. A related exemption covers services for direct and exclusive use in public-private partnership infrastructure projects. The specific First Schedule paragraph numbers reported for these exemptions rest on a single advisory source and are not stated here.
What changed in detail
Kenya’s Finance Act, 2026 introduces new VAT exemptions in the First Schedule to the VAT Act, CAP 476, with effect from 1 July 2026:
- goods for direct and exclusive use in infrastructure projects under a public-private partnership framework, on Cabinet Secretary approval;
- goods for direct and exclusive use in infrastructure projects undertaken and funded by the National Infrastructure Fund, on National Treasury Cabinet Secretary approval;
- plant, machinery, equipment and spare parts imported or purchased locally for a project with a total investment value of at least KES 3 billion, on approval by the Cabinet Secretaries for the National Treasury and for Trade and Investment Promotion.
A related exemption covers services for direct and exclusive use in public-private partnership infrastructure projects. The specific First Schedule paragraph numbers reported for these exemptions rest on a single advisory source and are deliberately not stated here.
What it means
Every one of these exemptions is gated on a ministerial approval, which makes the approval — not the invoice — the thing that determines the VAT treatment. A supplier who zero-rates on the strength of a client’s assurance that a project qualifies is carrying the risk if the approval never lands. Get the approval reference into the file before applying the exemption.
On sourcing: Kenya Law returns HTTP 403 on every route, so the enacted text could not be read directly. The two PPP exemptions are in the Finance Bill, 2026 as introduced (Kenya Gazette Supplement No. 113, on parliament.go.ke) at First Schedule paragraph 170 for goods and Part II paragraph 39 for services. The National Infrastructure Fund and KES 3 billion exemptions are not in that Bill text — they appear to have been added by floor amendment before passage, and no official source for them was reachable, so treat those two as corroborated but unconfirmed.