Kenyan taxation system
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Kenya's
Income tax
The Income Tax Act is the most important tax used in Kenya. It is up to the employer to make sure that the taxes are deducted at source, that employees pay taxes and that they have a
Taxable income
Taxable Income | Interest Rate % |
---|---|
KSh. 1/= – 1,467/46 | 10 |
1,467/46 – 2,849/94 | 15 |
2,849/94 – 4,233/56 | 20 |
4,233/56 – 5,616/44 | 25 |
5,616/44 and Above | 30 |
Value Added Tax
Exempt goods and services
Schedules to the current VAT act list goods and services that are exempt from VAT or are taxable at zero rate.[1] Those who pay for VAT on exempt goods are required to file a form for reimbursement within twelve months of the payment being made for full reimbursement to the KRA. Exports from Kenya pay a 0% rate of VAT.
Tax penalties
Late payment or non-payment of taxes attracts an interest rate of 2% per month. However, filing a late monthly payment of VAT requires a charge of 5 percent or $110, whichever is higher.
Corporate tax
The Corporate Tax Act was set up to deal with all corporate tax issues. All companies must register with the KRA for a PIN. They must then register for each applicable tax for which they are liable which will usually include Income Tax, PAYE, VAT and Excise duty. The Corporate Tax rate is currently a flat rate of 30%.
Furthermore, they are required to register with the NHIF(http://www.nhif.or.ke/healthinsurance/) which was set up to provide National Health cover. The rate of Tax due are calculated as follows;
Gross Income | Contribution |
---|---|
0>5999 | 150 |
6000 - 7999 | 300 |
8000 – 11999 | 400 |
12000 – 14999 | 500 |
15000 – 19999 | 600 |
20000 – 24999 | 750 |
25000 – 29999 | 850 |
30000 – 49999 | 1000 |
50000 – 99999 | 1500 |
>100000 | 2000 |
Self Employed | 500 |
There is also the NSSF (National Social Security Fund) which is used to create a pension scheme, to collect and administer contributions in Kenya.
Residence in Kenya
For Tax purposes a resident of Kenya is defined as anyone who is present in Kenya for 183 days during a 12-month period. An individual that stays in Kenya for longer than 183 days is considered to be a resident from the day of arrival. After leaving, Kenyan tax liability of an individual ends. This is also the case if a person stays for over 122 days a year on average over a period of 2 or more years. Non-residents staying in Kenya for a period shorter than 183 days are subject to national income tax on any income. They are also subject to municipal income tax as well as residents.
Excise duty
In 2015, the Excise Duty act was amended by the president of Kenya. There is currently specific duty rates on all goods with exemptions to
The current
Customs duty
Customs duties in Kenya include import duty, excise duty, VAT, import declaration fee and railway development levy. When goods are imported, the following charges are applied depending on the type of goods. There is an import declaration fee (IDF) which is 2.25% of the value of the good with a minimum of 5,000/= payable. There is a railway development levy of 1.5% also payable. There is also the usual charges that include import duty, excise duty, and VAT.
Trading zones
Kenya is a member of the EAC (
References
- ^ "Value Added Tax Act - No. 35 of 2013 Revised Edition 2017" (PDF). Kenya Law. National Council for Law Reporting. Retrieved 2018-07-07.
External links
- http://www.kenyalaw.org/kl/fileadmin/pdfdownloads/Acts/NationalHospitalInsuranceFundAct_No9of1998.pdf
- https://www.export.gov/article?id=Kenya-import-requirements-and-documentation
- http://www.ey.com/gl/en/services/tax/international-tax/alert--kenya-enacts-excise-duty-act--2015
- http://www.pkf.com/media/1960320/kenya%20pkf%20tax%20guide%202013.pdf
- http://www.kra.go.ke/