Uzuli Manufacturers Ltd. is registered for Value Added Tax (VAT) and deals in standard-rated, zero-rated and exempt supplies. The following transactions occurred in the month of March 2026:
Purchases:
• Raw materials for taxable goods: Sh.29 million.
• Raw materials for exempt goods: Sh.11.6 million.
• New delivery truck: Sh.14.5 million.
• Saloon car for Managing Director (3,000cc): Sh.8.7 million.
• Fuel for distribution vans: Sh.2.32 million.
• Imported specialised software (Reverse charge): Sh.6.4 million.
• Stationery and electricity (Mixed-use): Sh.1.45 million.
• Specialised packaging materials for export tea: Sh.2.1 million.
• Passenger van (14-seater) for staff commuting: Sh.3.48 million.
• Professional training fees for e-TIMS integration: Sh.232,000.
Sales:
• Taxable supplies at standard rate: Sh.58 million.
• Export sales to EAC Partner States: Sh.18 million.
• Exempt supplies: Sh.14 million.
• Blended and packaged tea for local consumption: Sh.4.8 million.
Additional information:
1. Input tax on mixed-use items is apportioned as per the formula in Section 17(6) of the VAT Act.
2. A credit note of Sh.1.16 million was issued for standard-rated goods returned.
3. Input tax was disallowed on a raw material import valued at Sh.5 million due to a missing Certificate of Origin.
4. Insurance compensation of Sh.2.4 million was received for taxable raw materials stolen in transit.
5. Disposed of a warehouse forklift for Sh.3.5 million, originally a zero-rated supply for a specific project. This is now deemed an inconsistent use under Section 66A of the VAT Act.
6. Input tax claim of Sh.928,000 for maintenance was rejected due to a non-e-TIMS compliant manual invoice.
7. A customer declared legally insolvent on 15 March 2026 owes Sh.1.5 million for supplies made in January 2024.
8. During the month, the company supplied goods to a designated Withholding VAT Agent who withheld tax of Sh.450,000.
9. The tea blending and packaging project was approved by the Commissioner in writing as qualifying for zero rating.
10. A reverse charge payment of Sh.1.8 million was made for advertising services provided through a digital marketplace.
11. Hotel and catering expenses of Sh.232,000 were incurred for the regional sales team outside their usual place of work.
12. Management intends to claim input tax of Sh.750,000 on a consignment imported in August 2025.
13. Processed goods worth Sh.1.8 million were supplied to the Kenya Defence Forces Welfare Services.
14. The passenger van (14-seater) above acquired for staff commuting was confirmed by the logbook to have a tare weight of 2,200 kilograms and a load-carrying capacity exceeding 2 tonnes.
Transactions are inclusive of VAT at the rate of 16% where applicable.
Required:
Compute the VAT paid by or refundable to Uzuli Manufacturers Ltd., for the month of March 2026.
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