In kenya, tax is a major component of government revenue. Mutua published by institute of economic affairs with the support of international budget partnership edited by jonathan tanui zilper c. Different rates apply to resident and nonresident companies. Aln member firms an indepth look at the tax amnesty on. March 22, 2017 taxkenya comments off on installment tax in kenya. Understanding capital gains tax in kenya sherialaw. Income tax act, cap 470 is the act of parliament that is used to make it mandatory for all persons who have taxable income in kenya to pay 25% of that income as income tax to the government. South african institute of chartered accountants integritax newsletter income tax and vat acts online the income tax act, 1962, valueadded tax act, 1991 and other tax acts may be accessed on the sars website the consolidated income tax act is available, in a pdf version, under the tax heading on the university of pretoria, laws of sa consolidated legislation website. The tax structure in kenya is skewed heavily towards income taxes and vat as the two largest source of total tax revenue mutua, 2012. The current vat act was passed into law on 2 september 20 and its implementation has.
The kenya revenue authority kra often takes the position that in such. Ratification of tax treaty between south africa and kenya or any supervisory projects in connection with such site or projects will be deemed to be a pe if the project or activity lasts for more than six months. This act may be cited as the persons with disabilities act, 2003. Taxhandbook 1 a citizens handbook on taxation in kenya. This act may be cited as the income tax amendment act 2014, and commences on the pt day of july 2014. Chapter 470 income tax act arrangement of sections part i preliminary section 1. A treasury bill is a paperless shortterm borrowing instrument issued by the government through the central bank of kenya as a fiscal agent to raise money on short term basis for a period of up to 1 year. Income tax and unilever kenya limited the unilever case. Income from certain settlements deemed to be income of settlor. The amnesty provisions came into force on 1 january 2017. However, if the rent collected exceeds ten million shillings during any year of income, one does not qualify to be in this tax bracket. Kenya personal income tax rate 20122020 data 20212022. Fortunately for you, there is a fitting free online paye income tax calculator you could use to help you with pinning the numbers where. Issue 1 14 3 a person who makes or intends to make taxable supplies is a taxable person while he is, or is required to be, registered under the sixth schedule.
These rates normally constitute the final liability for kenyan income tax. The income tax guide availed by kra is a technical, 57page document, written in court lingo. Instalment tax is estimated income tax paid to kra periodically, four times a year to cover the total tax payable for the year of income. Kenya income tax rate for 20172018, 20162017, 20152016, 2014 kenya income tax rate 2017 w.
Force of attraction article 71 contains a force of attraction rule in respect of business profits that is, the source state may tax. Power to impose taxes and charges kenya law reform. Ratification of tax treaty between south africa and kenya. A diagnosis of performance and options for further reform article pdf available december 2006 with 1,155 reads how we measure reads. Published by the national council for law reporting with the authority of. On th june 1985, the said provisions were suspended thus discontinuing the charge of capital gains tax in kenya. Laws of kenya persons with disabilities act chapter 3 revised edition 2012 2003 published by the national council for law reporting with the authority of the attorneygeneral.
In 1952, income tax ordinances were consolidated to form the east african tax management act no 8 of 1952 of east africa high commission. This booklet is a guide on the taxation regime in kenya. The tax payer would in this case benefit from the amnesty. Short title this act may be cited as the value added tax act. Collection of tax from persons leaving or having left kenya 146 99. Kenya tax law is an area of legal study dealing with the statutory, regulatory, constitutional, and commonlaw rules that constitute the law applicable to taxation, which is the method by which the kenya government levies on economic transactions.
In 1937 income tax ordinance had been enacted in kenya followed in 1940 by similar ordinances in uganda, tanganyika and zanzibar, which all joined to form a single income tax department. Exempt income under 1st schedule of income tax act ita e. Kenya tax rates for 20162017, 20152016, 20142015 kenya. Tax is a compulsory contribution to the government, paid by individuals and corporate entities, which does not bear any relationship to the benefit received hyman, 1987. An act of parliament to impose a tax to be known as value added tax on. Income tax an act of parliament to make provision for the charge, assessment and collection of income tax. A kenyan incorporated company which manufactures and distributes childrens toys. The consolidated income tax act is available, in a pdf version, under the tax heading on the university of pretoria, laws of sa consolidated legislation website. Income tax is governed under the income tax act cap 470, of the laws of kenya. The judgment of the high court in the unilever case led to the introduction of transfer pricing rules in july 2006, which provide guidance on the application of the armslength principle. Feb 24, 2015 capital gains tax was first introduced in kenya in 1975 under the eighth schedule to the income tax act. Laws of kenya income tax act chapter 470 revised edition 2018 2012. Income tax act applies, the accounting period of the taxpayer.
Interpretation 1 in this act, unless the context otherwise requires. Any other rate is a variation of those two tax rates. Treasury bills are issued in maturities of 91, 182 and 364 days. Profits after tax are subject to 5% or 10% withholding tax, for residents and nonresidents respectively, when distributed as dividend. It among other issues discusses design of various tax heads, their purposes and. The income tax act cap 470 in exercise of the powers conferred by section 188 of the income tax act, the minister for finance makes the following rules the income tax transfer pricing rules, 2006 1. Income tax and vat acts online the income tax act, 1962, valueadded tax act, 1991 and other tax acts may be accessed on the sars website.
Kenya, where the goods are made available by a supplier in kenya. The income tax act hereinafter referred to as the principal act is amended in section 2 cap. Capital gains tax cgt was reintroduced with effect from 1 january 2015. Exchange control income tax leaving or having left kenya repealed 148 100. Part iii income tax base division i calculating the income tax base subdivision a total income 5. Kenya revenue authority kratax administration aspect and has.
The rental income tax is the amount of tax one pays to the government for income that is derived from the use of residential property. The finance act has also granted the commissioner power to appoint and revoke any other person as a withholding vat agent. A kenyan incorporated company which manufactures and distributes childrens toys has grown over. This tax came about when the finance act 2015 introduced a new section 6a in the income tax act that provides for a. Section 64l of the income tax act, 1962, is hereby amended a by the insertion section 64l of the income tax act, 1962, is hereby amended by the insertion after subsection 1 of the following subsection. A citizens handbook on 6 taxation in kenya executive summary this handbook attempts to break down kenyas complex tax system into a user friendly form for consumption by the average person. Post continues after photo photo by waka business accounts are supposed to be audited by. Audi institute of economic affairs, 2011 5th floor ack garden house 1st ngong avenue p.
The value added tax regulations, 2017 timely update. The finance act 2016 introduced a provision in the tax procedures act no. Income tax act 58 of 1962 south african government. So you are excused for finding it a bit on the confusing side than helpful. Kenya personal income tax rate data, historical chart, and calendar of releases was last updated on february of 2020 from its official source. The principle law of the income tax act has 14 parts, 3 sections and schedules, all directing its implementation. This brings to fore, a glaring complexity on the ordinary citizen and professionals alike. Mar 22, 2017 introduction instalment tax is estimated income tax paid to kra periodically, four times a year to cover the total tax payable for the year of income. Finance bill, 2012 vat act schedules harmonised customs tariff codes the long awaited vat bill is finally released tax payers have. Legal alert kenya tax amnesty guidelines fail to provide. Reforming the tax system for efficiency and effectiveness.
Amendment act, 2020 and shall come into operation, or. A citizens handbook on taxation in kenya 2 written by john m. Pursuant to section 67 of the value added tax act, 20, the cabinet secretary for the national treasury cs, recently published the vat regulations through legal notice 54 of 2017. Home income tax service tax vat central excise online forms bare acts companies act cpc crpc ipc formats. Download pdf my best business intelligence, in one easy email your first step to building a. An act of parliament to provide for the establishment of the kenya maritime authority as a body with responsibility to monitor, regulate and co. It among other issues discusses design of various tax heads, their purposes and differences and also how they are administered. This was income accrued or derived from kenya and therefore liable to tax in kenya. The final section of each country summary sets out the double tax treaty and nontreaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments.
Instalment tax is administered under the income tax act cap 470, laws of kenya. These rules may be cited as the income tax transfer pricing rules, and shall come into operation on the 1st. An overview of kenya tax law kenya tax law is an area of legal study dealing with the statutory, regulatory, constitutional, and commonlaw rules that constitute the law applicable to taxation, which is the method by which the kenya government levies on economic transactions. The rate of tax is 5% of the net gain on the transfer of property. Kenya adopted the income tax act in 1973 african development bank group, 2010. Given the destabilizing effects of the budget deficits and the fact that they were becoming. Resident and nonresident companies are subject to income tax on income accrued or derived from kenya. On th june 1985, the said provisions were suspended thus discontinuing the charge of capital gains tax. Interpretation 10 part ii imposition of income tax 22 3. Download pdf my best business intelligence, in one easy email your first step to building a free, personalized, morning email brief. The personal income tax rate in kenya stands at 30 percent. Statutory rules section 18 3 of the income tax act, chapter 470 of the laws of kenya the act.
945 633 1008 960 544 769 482 668 602 575 1543 125 66 16 727 378 372 1466 259 963 1034 921 1433 1063 560 595 491 736