Proforma Invoice (Kenya)

A Proforma Invoice in Kenya documents a transaction and the sum due, serving as proof of the charge or payment made.

The Value Added Tax Act No. 35 of 2013, administered by the Kenya Revenue Authority (KRA), is the primary tax statute relevant to Proforma Invoices in Kenya. Under Section 68 of the VAT Act, a registered supplier must issue a tax invoice within thirty days of making a taxable supply. A Proforma Invoice precedes the tax invoice and does not itself create a VAT obligation — the VAT obligation arises on the tax point, which is the earlier of the date of supply or the date of payment under Section 12 of the VAT Act No. 35 of 2013. The Proforma Invoice should indicate whether the quoted price is VAT-inclusive or VAT-exclusive and, where the seller is a KRA-registered VAT person, state the seller's KRA Personal Identification Number (PIN) and VAT registration number.

For cross-border transactions, the Proforma Invoice is a document required by Kenyan customs and by the customs authorities of importing countries within the East African Community (EAC). The East African Community Customs Management Act, 2004 (EACCMA), which governs customs clearance at all Kenyan points of entry including the Port of Mombasa, the Inland Container Depot at Embakasi, and the Jomo Kenyatta International Airport, requires importers to submit a Proforma Invoice as part of the customs entry documentation. The Kenya Revenue Authority Customs & Border Control department uses the Proforma Invoice to assess customs duty under the EAC Common External Tariff (CET) and import declaration fees under the Import Declaration Form (IDF) regime.

The Import Declaration Form (IDF) system administered by the KRA requires importers of goods into Kenya valued at CIF (cost, insurance, and freight) above USD 2,000 to submit an IDF before shipment. The Proforma Invoice provides the CIF value used for IDF submission. An inaccurate or understated Proforma Invoice used to obtain an IDF at a lower duty value constitutes customs fraud under the EACCMA and exposes the importer to penalties, seizure of goods, and prosecution.

For letter-of-credit transactions processed through Kenyan commercial banks regulated by the Central Bank of Kenya under the Banking Act Cap. 488, the Proforma Invoice is the document the buyer presents to the issuing bank to open the letter of credit. The bank reviews the Proforma Invoice against the terms of the underlying purchase order or contract to determine the credit amount. Discrepancies between the Proforma Invoice and the subsequent commercial invoice presented with shipping documents may cause the letter of credit to be rejected by the confirming or advising bank under the Uniform Customs and Practice for Documentary Credits (UCP 600) rules adopted by Kenyan banks.

The Proforma Invoice is also used in domestic Kenyan B2B transactions as a quotation document that protects the buyer from price fluctuations between order placement and invoicing. A Proforma Invoice with a stated validity period binds the seller to the quoted price for the duration of that period under the law of contract as applied by the Law of Contract Act Cap. 23 — an offer with a stated acceptance period cannot be withdrawn before that period expires.

Kenya's Tax Procedures Act No. 29 of 2015 requires all business transactions exceeding prescribed thresholds to be documented and the records retained for at least 5 years. Proforma Invoices are commercial records that must be retained under this obligation.

The Pre-Export Verification of Conformity (PVoC) programme administered jointly by the Kenya Bureau of Standards (KEBS) and accredited inspection bodies abroad requires a Proforma Invoice as part of the inspection documentation for regulated product categories imported into Kenya. The PVoC programme covers products such as electrical equipment, building materials, toys, food products, and cosmetics. An importer who fails to submit an accurate Proforma Invoice at the PVoC inspection stage may face rejection of the Certificate of Conformity (CoC), causing shipment delays and additional inspection costs at the Port of Mombasa or JKIA.

For transactions financed through government-supported trade finance facilities — such as export credit guarantees offered by the Export Promotion Council under the Export Promotion Council Act Cap. 405 or credit lines extended through the Kenya Export Promotion and Branding Agency (KEPROBA) — the Proforma Invoice is a primary document required by the administering institution. The Proforma Invoice must accurately reflect the agreed commercial terms and the export value of the goods to support the credit application and the export promotion statistics maintained by KEPROBA.

Digital Proforma Invoices issued in Kenya must comply with the Kenya Information and Communications Act Cap. 411A, which recognises electronic signatures and electronic documents as legally equivalent to their paper counterparts. A digitally signed Proforma Invoice sent by email or through a cloud-based accounting platform such as QuickBooks, Sage, or a KRA-integrated electronic tax register system is admissible as a commercial record under the Evidence Act Cap. 80 and satisfies the documentation requirements of the Tax Procedures Act No. 29 of 2015.

A Proforma Invoice in Kenya is needed at the pre-sale stage of any commercial transaction where the buyer requires a formal price commitment before committing to purchase or before taking steps that depend on knowing the price in advance.

A Proforma Invoice is required when a Kenyan importer is applying to open a letter of credit through a commercial bank regulated by the Central Bank of Kenya. The issuing bank requires the Proforma Invoice to establish the credit amount, the description of goods, the shipping terms (Incoterms), and the currency of the transaction. Without a Proforma Invoice, the bank cannot process the letter of credit application.

A Proforma Invoice is needed when a Kenyan importer is applying for an Import Declaration Form (IDF) from the Kenya Revenue Authority before shipment of goods into Kenya. The IDF system requires the importer to declare the CIF value of the incoming goods, which is taken from the Proforma Invoice. Submission of the IDF without a supporting Proforma Invoice or with an inaccurate valuation attracts customs penalties under the East African Community Customs Management Act, 2004.

A Proforma Invoice is required when a Kenyan buyer needs to apply to the Central Bank of Kenya or to a commercial bank for foreign exchange approval to pay an overseas supplier. The Proforma Invoice documents the payment obligation in foreign currency and supports the bank's forex approval process under the Foreign Exchange Act Cap. 113A.

A Proforma Invoice is needed when a Kenyan government entity or state corporation procuring goods under the Public Procurement and Asset Disposal Act No. 33 of 2015 requires a price quotation from a supplier before issuing a local purchase order (LPO). The Public Procurement Regulatory Authority (PPRA) guidelines require documented price offers from suppliers, and the Proforma Invoice fulfils this function.

A Proforma Invoice is required when a Kenyan exporter ships goods to a buyer in another EAC member state — Uganda, Tanzania, Rwanda, Burundi, South Sudan, or the Democratic Republic of the Congo. The receiving country's customs authority requires a Proforma Invoice to assess the import duty and levy applicable under the EAC Common External Tariff (CET).

A Proforma Invoice is needed when a domestic Kenyan buyer requires management or board approval before committing to a purchase. The Proforma Invoice provides the formal price documentation that the approval process requires, including VAT amounts and delivery costs, enabling the buyer to present a complete cost analysis.

A Proforma Invoice is required when a Kenyan supplier is participating in a public tender administered under the Public Procurement and Asset Disposal Act No. 33 of 2015. The Public Procurement Regulatory Authority (PPRA) requires tenderers to submit price schedules and quotations in a standardised format; a Proforma Invoice serves as the commercial price offer that forms the basis of the tender evaluation. Accuracy and completeness of the Proforma Invoice are critical — discrepancies between the Proforma Invoice price and the subsequent contract price may trigger a renegotiation requirement under the PPRA regulations.

A Proforma Invoice is needed when a Kenyan small and medium enterprise (SME) is applying for trade finance from a Kenyan commercial bank regulated by the Central Bank of Kenya. Banks including KCB Group, Equity Bank, Co-operative Bank of Kenya, and NCBA require a Proforma Invoice as supporting documentation for import finance facilities, invoice discounting, and pre-shipment finance. The Proforma Invoice confirms the existence of a commercial transaction and provides the bank with the basis for assessing the credit risk of the facility.

Under the Central Bank of Kenya Act (Cap. 491), the Central Bank of Kenya (CBK) regulates banking. The Capital Markets Authority (CMA) regulates securities under the Capital Markets Act (Cap. 485A). Section 84 of the Bills of Exchange Act (Cap. 27) governs promissory notes. The Kenya Revenue Authority (KRA) administers tax obligations. The Microfinance Act No. 19 of 2006 regulates microfinance institutions. The Hire Purchase Act (Cap. 507) governs credit sale agreements.

A Kenya Proforma Invoice under the Value Added Tax Act No. 35 of 2013 and the East African Community Customs Management Act, 2004 must contain the following essential elements to satisfy tax, customs, and banking requirements.

Seller and Buyer Identification: Full legal name, physical address, postal address, and telephone number of both the seller and the buyer. For KRA-registered sellers, the seller's KRA Personal Identification Number (PIN) and VAT registration number must appear on the Proforma Invoice. For corporate sellers, the company's Certificate of Incorporation number from the Business Registration Service (BRS) may also be stated. The buyer's KRA PIN should be included where the transaction will subsequently attract a tax invoice for withholding tax or VAT purposes.

Proforma Invoice Number and Date: A unique sequential Proforma Invoice reference number assigned by the seller's accounting system, and the date of issue. The date triggers the validity period of the price offer. Customs and banking authorities use the invoice number to cross-reference the Proforma Invoice against subsequent commercial invoices and shipping documents.

Description of Goods or Services: A precise description of each line item — trade name, HS (Harmonised System) code where the goods are to be imported through a Kenyan port of entry, quantity, unit of measurement, and unit price. The HS code is required by the KRA Customs & Border Control department to classify the goods under the EAC Common External Tariff. Generic or vague descriptions cause customs delays and may be treated as misdescription under the EACCMA.

Pricing and Currency: The unit price, subtotal per line item, and total price. The currency must be stated — Kenya Shillings (KES) for domestic transactions, or the agreed foreign currency (USD, EUR, GBP) for cross-border transactions. Exchange rate risk should be addressed — the Proforma Invoice should state whether the price is fixed in the stated currency for the validity period or subject to exchange rate variation.

VAT Treatment: Whether the quoted price is VAT-inclusive or VAT-exclusive. For KRA-registered VAT persons, the VAT amount must be shown separately at the applicable rate — the standard rate is 16% under Schedule I to the Value Added Tax Act No. 35 of 2013. Zero-rated or exempt supplies must be identified with reference to the relevant schedule of the VAT Act. The Proforma Invoice is not a tax invoice under Section 68 of the VAT Act and does not create a VAT obligation, but accurate VAT disclosure enables the buyer to budget correctly.

Delivery and Shipping Terms: The Incoterms rule applicable to the shipment — EXW, FOB Mombasa, CIF Nairobi, DAP destination, or another Incoterms 2020 term — and the estimated delivery date or lead time. For imports into Kenya, the Port of Mombasa or Inland Container Depot at Embakasi is the standard point of delivery for maritime shipments.

Payment Terms: The payment method (letter of credit, bank transfer, M-Pesa, or cash on delivery), the payment currency, and the payment due date or milestone. Where the transaction involves a letter of credit, the Proforma Invoice should state the required LC expiry date and the advising bank details.

Validity Period: The period for which the quoted prices are firm — typically 30 to 90 days. After the validity period expires, the seller is not bound by the quoted price and may issue a revised Proforma Invoice.

Signature and Stamp: The authorised signature of the seller's representative and, where applicable, the seller's company stamp. Customs authorities in Kenya and other EAC states may require a signed Proforma Invoice as an authentic document. The forms-legal.com Kenya Proforma Invoice template includes all mandatory fields required by the KRA IDF system, EAC customs, and UCP 600 compliant letter-of-credit processing.

Withholding Tax Disclosure: Where the transaction is subject to withholding tax under Section 35 of the Income Tax Act Cap. 470 — for example, management fees, royalties, or technical services — the Proforma Invoice should indicate the applicable withholding tax rate so that the buyer can net off the withholding tax from the payment and remit the withheld amount to the KRA. Failure to withhold tax where required exposes the buyer to KRA assessments and penalties.

Counterpart Document Cross-Reference: A well-structured Proforma Invoice references the underlying purchase order number, tender reference, or contract number to which it relates. This cross-reference enables the buyer's accounts payable team, the buyer's bank, and the KRA auditor to trace the commercial transaction from the original purchase order through the Proforma Invoice to the final tax invoice and payment record. A clear document trail reduces the risk of disputed invoices and supports the buyer's input VAT claim before the KRA.

Record Retention: Both the seller and the buyer must retain the Proforma Invoice for a minimum of five years under the Tax Procedures Act No. 29 of 2015. For customs purposes, the importer must retain the Proforma Invoice used for the IDF application for five years from the date of importation, as the KRA Customs & Border Control may conduct post-clearance audits under the East African Community Customs Management Act, 2004 and demand production of original import documentation.

Under the Central Bank of Kenya Act (Cap. 491), the Central Bank of Kenya (CBK) regulates banking. The Capital Markets Authority (CMA) regulates securities under the Capital Markets Act (Cap. 485A). Section 84 of the Bills of Exchange Act (Cap. 27) governs promissory notes. The Kenya Revenue Authority (KRA) administers tax obligations. The Microfinance Act No. 19 of 2006 regulates microfinance institutions. The Hire Purchase Act (Cap. 507) governs credit sale agreements.