Running a restaurant in Kenya involves more than preparing good food and serving customers. Restaurant owners must also understand KRA eTIMS, VAT, the Tourism Levy, service charge, employer levies such as the NITA Industrial Training Levy, and the different filing deadlines attached to each obligation.
These charges are often confused with one another.
- VAT is a tax collected for the Kenya Revenue Authority (KRA).
- Tourism Levy is a separate levy payable by qualifying regulated tourism establishments.
- Service charge is not the same thing as VAT or Tourism Levy.
- NITA levy is an employer obligation and should not normally appear on a customer's restaurant bill.
This guide explains how the main restaurant taxes and levies work in Kenya and what someone starting or operating a restaurant should know.
Last reviewed: October 2026. Tax and regulatory rules can change. Restaurant owners should confirm any later changes with KRA, Tourism Fund, NITA, the Tourism Regulatory Authority and their professional tax adviser.
Quick Summary: Restaurant Taxes and Levies in Kenya
| Charge | Current Rate / Amount | Who Pays? | Customer Bill? | Main Deadline | | --- | ---: | --- | --- | --- | | eTIMS | Not a tax rate | Business | Invoice system | Transactions should be invoiced electronically | | VAT | 16% general rate | Customer, collected by VAT-registered restaurant | Yes | By 20th of following month | | Tourism Levy | 2% | Qualifying regulated tourism establishment/customer transaction | Normally accounted for on qualifying sales | By 10th of following month | | Service Charge | Set by restaurant; often 5% where used | Customer | Only if restaurant applies it | Depends on restaurant arrangements | | NITA Industrial Training Levy | KSh 50 per employee per month | Employer | No | Last working day of the month |
The most important point is that these charges should not simply be combined into one tax percentage.
Each has a different legal purpose, calculation and payment destination.
What Is eTIMS and Does a Restaurant Need It?
eTIMS stands for electronic Tax Invoice Management System.
It is KRA's electronic invoicing system.
KRA currently requires persons engaged in business to onboard eTIMS and issue electronic tax invoices.
This means eTIMS should not be associated only with large VAT-registered businesses.
A restaurant may therefore need to issue eTIMS-compliant invoices even when it is not registered for VAT.
This distinction is extremely important.
eTIMS Does Not Automatically Mean VAT
A restaurant can be:
- Registered on eTIMS and VAT registered.
- Registered on eTIMS but not VAT registered.
Whether you charge VAT depends on your VAT registration status.
Do not start charging customers 16% VAT merely because you have registered for eTIMS.
VAT should only be charged where the business is properly registered and required or authorised to charge VAT.
Which Restaurants Must Register for VAT?
The general compulsory VAT registration threshold in Kenya is currently:
KSh 5 million or more in taxable supplies in a year.
Therefore, if your restaurant's taxable turnover reaches or is expected to reach the applicable KRA threshold, you should assess your VAT registration obligation.
Businesses below the compulsory threshold may in some circumstances apply for voluntary VAT registration, subject to KRA requirements.
Once VAT registered, the restaurant generally:
- Charges VAT on taxable sales.
- Issues compliant tax invoices.
- Reports output VAT.
- Claims qualifying input VAT.
- Files its VAT return.
- Pays any VAT due to KRA.
What Is the VAT Rate for Restaurants in Kenya?
The general VAT rate in Kenya is currently:
16%.
For a normal taxable restaurant supply made by a VAT-registered restaurant, the restaurant collects VAT from the customer and later accounts for it to KRA.
VAT is therefore not restaurant income.
The restaurant is collecting the tax as part of its taxable sales and accounting for it to KRA.
When Is Restaurant VAT Filed and Paid?
VAT returns and VAT payments are generally due:
On or before the 20th day of the month following the tax period.
For example, VAT relating to taxable transactions made in September would normally be dealt with by the applicable October deadline.
A restaurant should therefore be able to produce accurate monthly reports showing:
- Taxable sales.
- VAT-exclusive sales.
- Output VAT.
- Qualifying input VAT.
- Credit notes.
- Cancelled transactions.
- eTIMS invoice references.
This is one reason a restaurant POS system should not treat taxes as simple manual additions at the end of the month.
The tax treatment needs to begin when the sale takes place.
What Was the Catering Levy?
Many Kenyan restaurant owners still use phrases such as:
- Catering levy.
- Hotel catering levy.
- CTDL.
- Catering and tourism levy.
- Tourism catering levy.
The terminology has changed over time.
The current levy is generally referred to as the Tourism Levy and is administered by the Tourism Fund.
Tourism Fund is the legal successor to the former Catering and Tourism Development Levy Trustees.
That history explains why many business owners still refer to the current Tourism Levy as the "catering levy."
For current compliance purposes, restaurant operators should look for guidance relating to the Tourism Levy.
How Much Is the Tourism Levy?
The current Tourism Levy rate is:
2%.
Tourism Fund describes its mandate as collecting the 2% Tourism Levy from regulated hotels, restaurants and other regulated tourism activities in Kenya.
It is a completely separate obligation from VAT.
Therefore:
16% VAT does not replace the 2% Tourism Levy.
And:
The 2% Tourism Levy does not replace VAT.
A restaurant may therefore have to account for both where both obligations apply.
Does Every Restaurant Automatically Pay the 2% Tourism Levy?
Not every food seller should simply assume that it must start charging 2% without first establishing its regulatory classification.
The Tourism Levy applies to regulated tourism activities and services.
Tourism Fund currently provides registration criteria for regulated establishments, including criteria applicable to Class B enterprises.
Its published registration guidance states that a Class B enterprise meeting the applicable classification criteria includes an enterprise where minimum gross receipts from all sales amount to KSh 250,000 per month.
Restaurant owners should therefore establish:
- Whether the establishment falls within the regulated tourism categories.
- How the establishment is classified.
- Whether registration with Tourism Fund is required.
- Whether a Tourism Regulatory Authority licence is required.
- From which date Tourism Levy becomes applicable.
Do not confuse Tourism Fund registration with:
- KRA registration.
- eTIMS registration.
- VAT registration.
- County business permits.
- Tourism Regulatory Authority licensing.
They are different regulatory requirements.
When Is the 2% Tourism Levy Due?
Tourism Levy returns and payments are generally due:
On or before the 10th day of the following month.
This is different from VAT.
For a restaurant that has both obligations, an easy monthly compliance reminder is:
- 10th — Tourism Levy
- 20th — VAT
Missing the Tourism Levy deadline may result in penalties, so the POS and accounting records should make the monthly levy amount easy to establish.
How Is the Tourism Levy Calculated?
For a simple example, assume the levyable restaurant sale before the Tourism Levy is:
- KSh 1,000
Tourism Levy:
- 2% × KSh 1,000 = KSh 20
The Tourism Levy is therefore:
KSh 20
The exact bill calculation must also take into account whether the restaurant is VAT registered and whether a qualifying service charge is being applied.
VAT and Tourism Levy Are Calculated Separately
One of the most important rules for restaurant billing is that you should not simply calculate:
16% + 2% = 18%
and then create one tax called "18% tax."
They should remain separate.
For example, if the relevant base restaurant service is KSh 1,000:
- Base sale: KSh 1,000
- VAT at 16%: KSh 160
- Tourism Levy at 2%: KSh 20
Total before any service charge:
- KSh 1,180
The receipt should clearly identify the applicable components rather than hiding them inside one unexplained tax figure.
Should VAT Be Charged on the Tourism Levy?
The VAT Act provides special treatment for accommodation and restaurant services.
The taxable consideration for the restaurant service excludes the Tourism Levy imposed under the Tourism Act.
In practical terms, a restaurant should not simply charge VAT on top of the Tourism Levy itself.
Your POS configuration therefore needs to understand the difference between:
- Taxable restaurant revenue.
- VAT.
- Tourism Levy.
- Service charge.
Incorrectly configuring a POS so that one tax compounds on top of another can result in inaccurate customer bills and inaccurate tax reports.
What Is Restaurant Service Charge?
A service charge is different from a government tax.
It is generally an amount added by a restaurant or hotel in connection with service provided to customers.
You may commonly see restaurants apply:
5% service charge
but restaurant owners should understand an important point:
5% is not a universal government tax rate that every restaurant must automatically add to every bill.
Tourism Fund uses examples involving a 5% service charge when demonstrating levy calculations, but that does not turn 5% into a compulsory tax for every restaurant.
The restaurant's service-charge arrangements should be properly established, communicated and administered.
Is Service Charge Subject to VAT?
Kenya's VAT rules contain specific treatment for qualifying restaurant and hotel service charges paid in lieu of tips.
A service charge may be excluded from the VAT taxable consideration where the statutory requirements are satisfied, including where:
- The service charge is distributed directly to employees.
- There is a written agreement between the employer and employees governing the arrangement.
- The service charge does not exceed 10% of the price of the service excluding the service charge.
This means restaurant owners should not assume that every amount labelled "service charge" automatically receives the same VAT treatment.
The actual arrangement matters.
If you operate a service-charge scheme, ensure your accountant or tax adviser reviews:
- How it is collected.
- How it appears on the receipt.
- How it is recorded in the POS.
- How it is distributed to staff.
- The written staff agreement.
- Its VAT treatment.
Example Restaurant Bill With VAT, Tourism Levy and 5% Service Charge
Assume:
- Restaurant food/service value: KSh 1,000
- VAT: 16%
- Tourism Levy: 2%
- Service charge: 5%
An illustrative bill could look like this:
| Item | Amount |
| --- | ---: |
| Restaurant sale | KSh 1,000 |
| VAT — 16% | KSh 160 |
| Tourism Levy — 2% | KSh 20 | | Service Charge — 5% | KSh 50 | | Total | KSh 1,230 |
The important part is not merely reaching KSh 1,230.
Your POS must also know that:
- KSh 1,000 is the underlying restaurant sale.
- KSh 160 is VAT.
- KSh 20 is Tourism Levy.
- KSh 50 is service charge.
- Each amount may have a different accounting and reporting treatment.
Example Without Service Charge
If the restaurant does not impose a service charge:
| Item | Amount |
| --- | ---: |
| Restaurant sale | KSh 1,000 |
| VAT — 16% | KSh 160 |
| Tourism Levy — 2% | KSh 20 | | Total | KSh 1,180 |
A restaurant is therefore not required to invent a service charge simply because Tourism Levy and VAT apply.
What If the Restaurant Is Not VAT Registered?
Suppose the restaurant is required to account for Tourism Levy but is not VAT registered.
It should not simply add 16% VAT to the bill.
An illustrative transaction might instead contain:
- Base restaurant sale: KSh 1,000
- Tourism Levy at 2%: KSh 20
Total:
- KSh 1,020
If the restaurant also operates a valid service-charge arrangement, that charge would be dealt with separately according to the business's arrangement.
Remember:
eTIMS registration does not automatically make a restaurant VAT registered.
What Is the NITA Levy?
The NITA Industrial Training Levy is another obligation restaurant owners frequently overlook.
NITA is the National Industrial Training Authority.
The training levy helps support industrial training and skills development in Kenya.
For employers, the current levy is:
KSh 50 per employee per month.
This amount is very different from VAT and Tourism Levy because it relates to the restaurant's employees rather than to an individual customer's meal.
Who Pays the NITA Levy?
The employer pays the NITA levy.
NITA states that it is:
Not a deduction from payroll.
Therefore, a restaurant should not:
- Deduct KSh 50 from each employee's salary as NITA levy.
- Show NITA levy as a customer tax.
- Add NITA levy to a restaurant bill.
- Treat NITA as part of the 2% Tourism Levy.
The business pays the levy based on its employee numbers.
Does NITA Apply to Restaurants?
A restaurant that employs staff should consider its NITA registration and levy obligations.
NITA's current guidance states that employers operating in Kenya need to register as training levy payers.
The legal definition of employee for purposes of the training levy is broad.
It can include:
- Permanent employees.
- Temporary employees.
- Seasonal workers.
- Casual workers.
- Apprentices.
- Trainees.
- Indentured learners.
This is particularly relevant to restaurants because restaurants frequently use combinations of permanent, casual, temporary and seasonal staff.
Do not calculate the NITA levy using only senior or permanent employees without first confirming who falls within the applicable employee definition.
How Much NITA Levy Does a Restaurant Pay?
The current amount is:
KSh 50 × number of applicable employees per month.
For example:
Restaurant with 20 employees
20 × KSh 50 = KSh 1,000 per month
Restaurant with 50 employees
50 × KSh 50 = KSh 2,500 per month
Restaurant with 100 employees
100 × KSh 50 = KSh 5,000 per month
Again, this is an employer expense, not a customer bill item.
When Is the NITA Levy Paid?
NITA's current employer guidance states that the KSh 50 per employee levy is payable monthly by the:
Last working day of the month.
Restaurant owners should therefore include NITA in their monthly payroll and compliance calendar.
A simple compliance reminder is:
- Last working day of the month — NITA Industrial Training Levy
- 10th of following month — Tourism Levy
- 20th of following month — VAT
Other payroll obligations have their own statutory deadlines and should be tracked separately.
Should NITA Appear on the Restaurant Receipt?
No.
A customer's bill should not contain something like:
- NITA Levy — KSh 50
- NITA — 1%
- Training Levy — KSh 50
NITA is not a restaurant consumption tax.
It is an employer training levy.
Your POS may help management track it as a business or payroll-related expense, but it should not be configured as a tax charged to restaurant customers.
NITA vs Service Charge: They Are Completely Different
These two are sometimes confused because both relate indirectly to restaurant employees.
They are nevertheless very different.
Service Charge
A service charge:
- May be charged to customers.
- May be connected to staff service or tips.
- May appear on the customer receipt.
- May be calculated as a percentage of the restaurant service.
- Has specific requirements where particular VAT treatment is claimed.
NITA Levy
NITA:
- Is paid by the employer.
- Is currently KSh 50 per applicable employee per month.
- Is not a customer tax.
- Should not be deducted from employee payroll as the employer's NITA levy.
- Should not appear on the restaurant customer's receipt.
Tourism Levy vs NITA Levy
Another common mistake is assuming that because a restaurant pays the Tourism Levy, it has already paid its training levy.
That is incorrect.
They are administered by different bodies and have different purposes.
Tourism Levy
- Administered by Tourism Fund.
- Generally 2%.
- Connected to regulated tourism businesses.
- Based on applicable sales and services.
- Usually due by the 10th of the following month.
NITA Industrial Training Levy
- Administered by NITA.
- KSh 50 per applicable employee per month.
- Paid by the employer.
- Not charged to restaurant customers.
- Currently payable by the last working day of the month.
A restaurant may have obligations under both systems.
What Should a Restaurant Receipt Show?
Where applicable, a properly configured restaurant POS should be able to distinguish clearly between:
- Food or product value.
- Beverages.
- Other taxable services.
- VAT.
- Tourism Levy.
- Service charge.
- Discounts.
- Payment method.
- eTIMS invoice information.
- Total paid.
Do not create one generic field called Tax and combine everything inside it.
Your accountant needs to know exactly how much relates to each obligation.
eTIMS and Restaurant POS Systems
For a busy restaurant, manually preparing eTIMS invoices after sales have already taken place can become difficult.
Restaurant sales can come from:
- Dine-in customers.
- Takeaway.
- Deliveries.
- Tables.
- Bar orders.
- Kitchen orders.
- Online orders.
- Cash payments.
- Card payments.
- M-Pesa.
- Credit customers.
- Events.
- Catering orders.
The best approach is for the restaurant POS and eTIMS workflow to work together.
A properly configured system should know:
- What was sold.
- Whether the item is taxable.
- Which VAT rate applies.
- Whether Tourism Levy applies.
- Whether service charge applies.
- The applicable customer information.
- The payment method.
- The eTIMS invoice status.
- How the transaction should appear in management reports.
Why Restaurant eTIMS Integration Matters
Without proper integration, restaurants can end up with three different versions of the same sale:
- The POS receipt.
- The eTIMS invoice.
- The accounting entry.
That creates reconciliation problems.
Ideally:
One restaurant sale should create one consistent transaction record from the table or till all the way through to accounting and eTIMS.
This helps reduce:
- Duplicate invoices.
- Missing eTIMS invoices.
- Incorrect VAT.
- Incorrect levy calculations.
- Mismatched daily sales.
- Manual data entry.
- Month-end reconciliation problems.
How VPOS Helps Restaurants Manage eTIMS and Restaurant Taxes
VPOS is designed to bring restaurant operations, payments, reporting and compliance into the same sales workflow.
Instead of calculating restaurant taxes manually at month end, a properly configured VPOS restaurant setup can distinguish the relevant amounts at transaction level.
Depending on the restaurant's configuration and legal obligations, this can include:
- Restaurant sales.
- VAT treatment.
- Tourism Levy.
- Service charge.
- eTIMS invoicing.
- M-Pesa payments.
- Cash and card payments.
- Table management.
- Waiter and service staff tracking.
- Kitchen orders.
- Receipts.
- Daily sales reports.
- Tax and management reporting.
The objective is simple:
The amount the waiter sees, the amount the cashier receives, the amount the customer is invoiced, the amount sent through eTIMS and the amount management reports should reconcile.
Starting a Restaurant in Kenya: Compliance Checklist
Before opening your doors, consider the following areas.
Business Registration
Ensure the restaurant operates through the appropriate legally registered business structure and has the required KRA PIN and tax obligations.
County Permits
Restaurant licences and permits can vary by county.
Confirm the requirements for your county, including applicable:
- Single business permits.
- Food hygiene requirements.
- Public health approvals.
- Fire requirements.
- Signage permissions.
- Other county permits.
Tourism Regulation
Determine whether the establishment is a regulated tourism enterprise and whether you require:
- Tourism Regulatory Authority licensing.
- Tourism Fund registration.
- Tourism Levy registration.
eTIMS
Ensure the business has an appropriate electronic invoicing solution and that the POS/eTIMS process is ready before trading volume becomes difficult to manage manually.
VAT
Monitor taxable turnover and determine whether compulsory VAT registration applies.
Do not wait until well after crossing the registration threshold to investigate the obligation.
Employees
If you employ staff, establish the applicable employer registrations and payroll obligations.
This includes checking your NITA Industrial Training Levy obligations in addition to other statutory employer deductions and contributions applicable to your workforce.
Service Charge
If you intend to impose a service charge:
- Decide the rate.
- Document the arrangement.
- Explain it clearly to customers.
- Configure it correctly in your POS.
- Establish how proceeds will be treated and distributed.
- Obtain advice on the applicable tax treatment.
Monthly Restaurant Compliance Calendar
A restaurant should maintain a compliance calendar rather than relying on memory.
During the Month
- Record every sale.
- Issue appropriate eTIMS invoices.
- Record purchases and supplier invoices.
- Reconcile M-Pesa, cash, bank and card transactions.
- Record credit notes and cancellations.
- Track employee numbers.
- Keep Tourism Levy records where applicable.
Last Working Day of the Month
- Review and pay the applicable NITA Industrial Training Levy in accordance with NITA requirements.
By the 10th of the Following Month
- File and pay the applicable Tourism Levy.
By the 20th of the Following Month
- File the applicable VAT return.
- Pay VAT due.
Also maintain a separate calendar for payroll taxes, employee contributions, income tax and other applicable statutory obligations.
Common Restaurant Tax Mistakes
Mistake 1: Assuming eTIMS Is Only for VAT Businesses
It is not.
KRA currently requires persons engaged in business to use electronic invoicing subject to the applicable rules.
Mistake 2: Charging VAT When Not VAT Registered
Having eTIMS does not by itself give a restaurant authority to charge VAT.
Mistake 3: Combining VAT and Tourism Levy Into One Percentage
Keep them separate.
Mistake 4: Charging VAT on the Tourism Levy
Tourism Levy has specific treatment under the VAT Act and should not simply be included in the VAT taxable amount.
Mistake 5: Assuming Every Restaurant Must Charge a 5% Service Charge
Service charge is not simply another universal government tax.
Mistake 6: Calling Tourism Levy NITA
They are completely separate obligations.
Mistake 7: Adding NITA Levy to Customer Bills
NITA Industrial Training Levy is an employer obligation.
Mistake 8: Deducting the Employer's KSh 50 NITA Levy From Staff Salaries
NITA states that the training levy is not a payroll deduction from the employee.
Mistake 9: Forgetting Casual Employees When Considering NITA
The applicable employee definition can include temporary, seasonal and casual workers.
Mistake 10: Using One Generic Tax Field in the POS
Your system should identify VAT, Tourism Levy and service charge separately.
Frequently Asked Questions
Is the Catering Levy Still Applicable in Kenya?
What many restaurant owners historically call the catering levy is now generally dealt with as the Tourism Levy administered by Tourism Fund.
The current standard Tourism Levy is 2% for qualifying regulated establishments and tourism activities.
Is Tourism Levy the Same as VAT?
No.
VAT is administered by KRA.
Tourism Levy is administered by Tourism Fund.
A restaurant may have to account for both.
How Much VAT Does a Restaurant Charge in Kenya?
The current general VAT rate is 16% for taxable supplies.
A restaurant should only charge VAT where it is properly VAT registered and the supply is taxable.
Does Every Restaurant Need VAT Registration?
Not necessarily.
The general compulsory registration threshold is currently KSh 5 million in annual taxable supplies, although businesses should assess their individual circumstances and voluntary registration rules.
Does Every Restaurant Need eTIMS?
KRA currently requires persons engaged in business to onboard eTIMS and issue electronic tax invoices under the applicable electronic invoicing rules.
This includes businesses that are not VAT registered.
How Much Is Tourism Levy in Kenya?
The current standard rate is 2%.
When Is Tourism Levy Paid?
Generally by the 10th day of the following month.
What Is the NITA Levy for Restaurants?
The NITA Industrial Training Levy is currently KSh 50 per applicable employee per month.
Who Pays NITA Levy?
The employer pays it.
Should NITA Levy Be Deducted From Employees?
NITA states that the levy is not a payroll deduction.
Should NITA Be Charged to Restaurant Customers?
No.
It should not be added to a customer's restaurant bill as a consumption tax.
When Should NITA Levy Be Paid?
NITA's current guidance states that it is payable monthly by the last working day of the month.
Is Restaurant Service Charge Compulsory?
A service charge should not be confused with a compulsory government tax.
Restaurants that apply a service charge should have properly documented arrangements and should configure and disclose it correctly.
Is Service Charge Always 5%?
No.
Although 5% is commonly encountered, restaurant owners should not interpret that as a universal statutory service-charge rate applicable to every restaurant.
Can a Restaurant Charge Both Service Charge and Tourism Levy?
Where the restaurant has a valid service-charge arrangement and is also subject to Tourism Levy, both may appear in the transaction.
They must be accounted for separately.
The Simplest Way to Remember the Difference
Think of the four main items this way:
- VAT — customer tax collected for KRA
- Tourism Levy — levy connected to qualifying regulated tourism activity
- Service Charge — restaurant service or tipping arrangement, not simply another government tax
- NITA — employer training levy based on employees
Keeping those four categories separate will prevent many of the most common restaurant billing and accounting mistakes.
Final Advice for Restaurant Owners
Before opening a restaurant in Kenya, do not configure your till by simply copying the tax settings used by another restaurant.
Two restaurants can have different obligations depending on:
- Turnover.
- VAT registration.
- Tourism classification.
- Type of establishment.
- Services provided.
- Service-charge arrangements.
- Employee numbers.
- Other regulatory circumstances.
Start with your legal and tax obligations, then configure your POS to match them.
A restaurant POS should do more than print receipts.
It should help you know:
- What you sold.
- How much VAT you collected.
- How much Tourism Levy is due.
- How much service charge was collected.
- Whether transactions reached eTIMS.
- How customers paid.
- What your daily sales were.
- Whether your figures reconcile at month end.
For restaurant operators using VPOS, the goal is to combine Restaurant POS, eTIMS, M-Pesa, tax handling, table management, kitchen operations and reporting into one controlled workflow.
That allows restaurant owners to spend less time reconstructing transactions at month end and more time running the business.
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Important: This guide is for general business information and reflects rules and official guidance reviewed in October 2026. Tax legislation, levy rules, thresholds and administrative procedures can change. Confirm the current requirements applicable to your individual restaurant with KRA, Tourism Fund, NITA, the Tourism Regulatory Authority and a qualified tax professional before implementing tax or payroll changes.