Doing Business in Kenya - RSM International

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Installments Due Date RateNon-Agricultural Companies1st Installment 4th month 25%2nd Installment 6th month 25%3rd installment 9th month 25%4th Installment 12th month 25%Agricultural Companies1st Installment 9th month 75%2nd Installment 12th month 25%The basis of assessing instalment tax is the lower of the preceding year’s tax liabilitymultiplied by 110% and the current year’s estimate.The final tax due is required to be paid on or before the end of the fourth monthafter the year-end or the last working day before the month-end where it falls on aSaturday, Sunday or a public holiday.Motor Vehicle Advance TaxApplicable to all commercial vehicles and PSV’s:• For vans, pickups, trucks, prime movers, trailers and lorries (except tractors andtrailers used for agricultural purposes), the higher of Shs 1,500 per ton of loadcapacity p.a. or Shs 2,400 p.a.• For saloons, station wagons, mini-buses, buses and coaches, the higher of Shs60 per passenger capacity p.m. or Shs 2,400 p.a.4.2.9 Set-Off of TaxWhere a taxpayer has any tax or duty payable to the KRA (except VAT and dutyon imports), such tax may be offset on request against any refund of tax or dutyconfirmed by KRA. Any such request for offset must be made 30 days prior to thetax due date.4.2.10 Turnover TaxTurnover tax is payable for businesses with a turnover of less than Shs 5,000,000per annum. The applicable rate is 3% of the gross receipts of the business. Turnovertax is not applicable to:• Rental income and management, professional or training fees;• Incorporated entities; and• Any income which is subject to a final withholding tax.32DOING BUSINESS IN KENYA
4.3 Personal Income Tax4.3.1 IntroductionThe Income Tax Act (Cap 470) contains the rules for the ascertainment of income,entitlement to personal relief and the assessment and collection of tax in relation topersonal income.4.3.2 Basis of Taxation and Tax RatesA Kenyan resident is taxed on his worldwide employment income, while a nonresidentis taxed on income from employment with a Kenyan resident employer or apermanent establishment in Kenya of a non-resident employer. Pension received bya resident individual from a pension fund established outside Kenya will be deemedto have been derived from Kenya to the extent to which it relates to employment orservices rendered in Kenya.An individual is resident in Kenya if he has a permanent home in Kenya and waspresent in the country at any time during a particular year of income, or if he has nopermanent home in Kenya but was present in Kenya for a period or periods amountingin the aggregate to more than 183 days in that year of income. Furthermore, anindividual is also resident if he has no permanent home in Kenya but was presentin Kenya in that year of income and in each of the 2 preceding years of income forperiods averaging to 122 days in each year of income.Taxable income from employment includes wages, salary, commission, bonus,allowances and directors’ fees. Travelling, entertainment and other similar allowancesare taxable unless they are purely a reimbursement of expenses incurred by theemployee in the course of their employment. The first Shs 2,000 per day receivedby an employee towards subsistence and travelling allowance for a person workingoutside the usual place of work is not construed as a benefit and therefore notsubject to tax.Each employer is required to operate The Pay As You Earn (PAYE) system ofwithholding tax at source from employment income paid to employees and remittingthe same to KRA. The PAYE rules set out the manner in which the system is to beoperated and also prescribes the monthly, quarterly and annual returns that are tobe provided to KRA or to the employees.DOING BUSINESS IN KENYA33
Page 7: 2.0 General2.1 IntroductionKenya li
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Page 58 and 59: granted or is partly granted, the b
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Page 62 and 63: Transit VisasThese are visas requir
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Page 66 and 67: 5.3.2 WagesAlthough the Employment
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Page 70 and 71: 6.0 ACCOUNTING6.1 Statutory Framewo
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9.0 Investing in Kenya9.1 General I
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9.3 Foreign Ownership of Shares and
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Contact Details - RSM AshvirRSM Ash
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Appendix of Acronyms used in the Bo
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Notes90DOING BUSINESS IN KENYA
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Doing Business in Kenya - RSM International

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