Taxation & Tax Compliance
It is said that death and taxes are the only things that are inevitable in life. Tax compliance can be extremely complex undertaking especially due to the ever changing income tax laws in Kenya. On annual basis during the budget making process, the Minister of Finance normally comes up with fiscal and monetary measures aimed at boosting the economic growth. This includes changes in taxes and tax rates to generate revenue.
Our team of qualified Tax Experts is always prepared to help you determine the kind of tax obligation that is appropriate for your business. We’ll also work with you to prepare accurate tax returns on monthly or annual basis with a view of minimizing business risks of unforeseen tax liabilities.
The following are main taxes in Kenya;
a) Corporation Tax: Corporation tax in Kenya is a form of income tax that is levied on companies and branches. Resident companies are taxable at a rate of 30% while non – resident companies and branches are taxable at a rate of 37.5%. Corporate tax is paid in instalments.
b) PAYE: Pay as you Earn in Kenya is a method of collecting tax at source from individuals in gainful
employment. The employer deducts a certain amount of tax from his / her employee’s salary or wages on each payday then remit the tax to the Authority. This relieves the employee from paying taxes at the end of the year and shifts the responsibility to the employers.
c) Withholding Tax: Withholding taxes in Kenya are deducted at source from the following sources of income: Interest, dividends, royalties, management or professional fees, training, commissions, pension or retirement annuity, rent, appearance or performance fees for entertaining, sporting or diverting an audience.
d) Value Added Tax (VAT) system in Kenya: Value Added Tax (VAT) is a tax on consumer expenditure
introduced in Kenya in January 1990 to replace Sales Tax, which had been in operation since 1973. VAT is levied on consumption of taxable goods and services supplied or imported into Kenya and is collected by registered persons at designated points who then remit it to the KRA.
e) Advance Tax in Kenya: Advance tax is applicable to Matatus and other commercial Vehicles. Any advance tax paid in Kenya becomes credit available for offset against the corporate tax liability.
f) Residential Rental Income Tax (MRI): The landlords pay residential rental income tax under a special category of tax specific to their needs. The taxpayers are not allowed any expenses or capital expenditure. It does not matter whether the taxpayers are individuals, corporate organizations, male, female, religious organization etc. The tax rate under this special category is 10 % of monthly rental income. The rental tax is based on the gross rental income collection per month and is payable by 20th of the following month.
Value Added Tax (V.A.T) Filing Services
If you run a business, determining when goods you have supplied are subject to VAT is complex and time consuming. In addition, the Kenya Revenue Authority requires you to withhold VAT at source if appointed as VAT Withholding agent. This is charged on eligible goods supplied or services provided in Kenya and on importation of taxable goods or services into Kenya. VAT is collected by registered persons at designated points who then remitted to the KRA. To ensure that your business is VAT compliant, we’ll support you to:-
1.Submit monthly VAT returns online on iTAX.
2.Submit a NIL return where no VAT to be declared.
3.Generate an E-slip that will be used to make physical payments of the tax due.
