Attachment J.6. VAT Guidance in Kenya.pdf

To: All USAID/Kenya and East Africa Implementing Partners From: Jonathan Chappell, Supervisory Contracting and Agreement Officer, Office of

Acquisition and Assistance, USAID/Kenya and East Africa Date: June 07, 2023 Subject: Update to VAT Guidance in Kenya

Dear USAID Implementing Partner, The purpose of this letter is to provide an update to existing guidance that has been provided by USAID/Kenya and East Africa (USAID/KEA) on Taxation of U.S. Government Foreign Assistance within Kenya. To date, the below communicated letters [herein referred to as, “the VAT guidance”] remain current and valid:

i) Letter dated February 09, 2023 - Reminder: Taxation of U.S. Government Foreign Assistance within Kenya

ii) Letter dated July 27, 2022 - Submission of Supplier’s Tax Compliance Certificate with DA 1 Forms

iii) Letter dated September 17, 2020 - Taxation of U.S. Government Foreign Assistance within Kenya

See below update to the timelines for obtaining refunds from vendors:

● USAID will track processing of the DA-1 form packages through the GOK internal approval processes. Any GOK timely approved DA-1 form package will be promptly returned to the partner to obtain the refund of the fees, duties, levies, and taxes from the vendor.

● USAID will notify the partner by email indicating that the GOK has approved the DA-1 form package and the partner MUST seek refund within a period of two (2) weeks after USAID sends the approved DA-1 form by email to the partner. The USAID email will include as an attachment, a PDF copy of the GOK approved DA-1 package. USAID will request the partner to pick up the approved DA-1 package from USAID/KEA or USAID will send the original GOK approved DA-1 form to the partner using a Kenyan courier service.

● USAID partners and their sub-recipients must obtain a refund from the vendor within the two-week period and notify USAID by return email when such refund was received. A copy of the vendor refund receipt and partner bank deposit slip must be provided to USAID via email to evidence the refund. The partner must reference the DA-1 form number for which the refund was received when transmitting the refund acknowledgement to USAID. Except as provided below in cases where a partner makes reasonable efforts but experiences issues with obtaining a refund, implementing partners who fail to provide the refund documentation to USAID within the two-week period, will be issued a Bill for Collection by USAID disallowing the cost under the partner agreement. These will also be followed up during annual financial audits. If a partner encounters issues with obtaining a refund, for any reason, including a lack of sufficient time, a vendor refusing to refund the GOK taxes when presented with the GOK approved DA-1 form, a vendor’s unavailability or any other reason outside the partner’s control, the partner must immediately notify USAID in writing stating all the pertinent facts regarding the efforts to obtain a refund from the vendor. All such official communications should be executed on the partner’s letterhead and a PDF copy of the signed letter sent to USAID as an email attachment. All communication with USAID related to DA-1 forms are to be sent to the following USAID email box:

NairobiVAT@usaid.gov mailto:NairobiVAT@usaid.gov

All email communications from the partner to the USAID email box will be acknowledged by return email.

Failure to fully and timely comply with these prescribed procedures in the above letters and in this update will result in the fees, duties, levies, and taxes being unallowable costs under your USAID agreement.

Any such unallowable costs will be absorbed by the Implementing Partner outside of the USAID agreement. USAID Implementing Partners are responsible for compliance with these policies on behalf of all sub-recipients.

USAID is committed to working with its partners to ensure compliance. This process will be discussed at partner forums, including post-award conferences, and throughout the award administration.

Your cooperation and continued partnership in striving to achieve our shared development and humanitarian assistance objectives is truly appreciated. If you require clarification on this request, please email NairobiVAT@usaid.gov.

Jonathan Chappell Supervisory Contracting/Agreement Officer USAID/Kenya and East Africa United Nations Avenue, Gigiri Nairobi, Kenya.

cc. All A/CORs - USAID/KEA mailto:NairobiVAT@usaid.gov