KenInvest
KenInvest
KenInvest
KenInvest
KenInvest
KenInvest
KenInvest

Overview

The Kenyan tax system comprises both direct and indirect form of taxes. This includes include Income Tax, Customs and Excise Duties and Value Added Tax (VAT).

Personal Identification Number (PIN) and VAT registration
Every natural or legal person is required by law to register and obtain a Personal Identification Number (PIN). This is the tax registration document.

An application for pin is done to the Kenya Revenue Authority (KRA) and can be done online as follows;

  •  Register a local company as a taxpayer
  •  Register a local individual as a taxpayer
  •  Register a foreign individual taxpayer
  •  Register a branch of a foreign company as a taxpayer

Types of taxes
The Kenyan tax system comprises both direct and indirect form of taxes. This includes include Income Tax, Customs and Excise Duties and Value Added Tax (VAT).
New investors are advised to familiarize themselves with the tax regime in Kenya. Penalties and interest levied on non-compliance with tax legislation is punitive.

Brief description of varies taxes is given below;


Corporate tax

Is a direct tax on profits made by corporate bodies and it has its legal basis in the Income Tax Act (Cap 470). It’s payable at the corporation rate by companies and unincorporated organisations and associations (excluding partnerships, sole proprietorships, and interest or dividend paid by a designated co-operative society) that have taxable income as defined by the Act.

The income of a partnership or a sole proprietorship is not taxable on the business entity but is taxed on the individual partner or the proprietor. The tax rates differ between resident and non-resident companies as outlined in the table below.

ITEM

% RATE

Resident Company

30%

Unincorporated entity with a turnover of up to Shs 5 million - on gross receipts

3%

Non-resident company operating as a branch under Certificate of Compliance

37.50%

Export Processing Zones Enterprises

 

First 10 Years

Nil

Next 10 Years

25%

Newly listed companies following year of listing

 

List at least 20% of its shares

27% for 3 yrs

List at least 30% of its shares

25% for 5 Yrs

List at least 40% of its shares

20% for 5 Yrs

Real Estate Investment Trusts

Exempt

Withholding tax
Is deducted on payment by a resident person or non-resident person with a permanent establishment on certain income deemed to have been derived from Kenya (irrespective of whether paid to resident or non-resident persons)
For rates of withholding tax click the link.

Value Added Tax (VAT)
The operation of VAT has its legal basis in the VAT Act 2013. Value Added Tax is charged on supply of taxable goods or services made or provided in Kenya and on importation of taxable goods or services into Kenya. Taxable goods and services are contained in the various schedules of the VAT Act. All goods and services are taxable except those excluded through the second and third schedules respectively.
The VAT Act constitutes the following schedules: -
1st Schedule -Specifies the exempt goods supplies, Exempt goods on transition and exempt services
2nd Schedule – Specifies Zero rated supplies

Excise Duty
Excise duty is imposed under the excise duty Act 2015 of laws of Kenya. The tax is levied on various products including alcoholic beverages, tobacco products, petroleum products, motor vehicles, carbonated drinks and mineral water, cosmetics, jewellery, bank charges and cell phone airtime.

1st schedule of the act provides rates of excise duty and 2nd schedule on supplies exempt from excisable goods and services.
http://www.kra.go.ke/notices/pdf/excise%20duty%20act%202015.pdf

Documents

DocumentIssuing AgencyMore Information
Information on taxation in KenyaPDF (600 KB) KenInvest More information on taxation can be found on Kenya Revenue Authority Website
Roadmaps to Kenya Revenue Authority (PIN/VAT Certificates, Licenses and Submitting Returns)PDF (155 KB) Kenya Revenue Authority You can visit KRA website and use some of its online service to lodge applications and submit returns.
Submit Tax Returns online Kenya Revenue Authority You can submit your tax returns to the Kenya Revenue Authority online. You will need a PIN Number which you can obtain from the same site.

 

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