Doing Business in Kenya - RSM International

• Amounts paid by an employer into a registered pension scheme subject toa maximum of Shs 240,000 p.a. However, employees of organisations notchargeable to tax will be taxed on contributions that the employer makes toan unregistered fund or on the excess contribution made to a registered fund.• Payment by an employer not exceeding Shs 240,000 p.a. of gratuity or similarpayment which is paid into a registered pension scheme.• International passage cost for non-citizen employees recruited outside Kenya.• Education fees of an employee’s dependants or relatives, if taxed on theemployer.• Education fees paid by an educational institution for low income employee’sdependants attending the institution. A low income employee is an employeewhose taxable income is not subject to tax at the rate of more than 20%.• Meals provided at employer’s canteen to low income employees.• The first Shs 150,000 p.m. of total income, and deduction of up to Shs 50,000p.m. for drugs treatment and home care services for disabled persons registeredwith the National Council for Persons with Disabilities, and approved by theCommissioner.• A deduction of one-third of employment income claimed by a non-citizenresident employee of a non-resident company or a partnership trading for profitapproved by the Commissioner, who is absent from Kenya for an aggregate of120 days or more in a year of income and whose employment income is notdeductible in ascertaining the employer’s income chargeable to tax.Taxable Employment Benefitsa) Motor Vehicles• Where a company car is provided to an employee, the benefit is taxed at thehigher of 2% p.m. of the initial cost of the vehicle and the value prescribedby the Commissioner.• Leased and hired vehicles provided to an employee are taxed at the cost ofhiring or leasing the vehicle.• Where the employee has restricted use of the car, the Commissioner mayupon application determine a lower rate based on usage.b) Domestic Benefits• Benefits including staff meals (except to low income employees), clubsubscriptions, house helps, water, security, electricity etc. are taxable atthe higher of cost or fair market value.• The Commissioner has prescribed the value of benefits where the cost tothe employer is difficult to ascertain. The prescribed rates are:• Telephone (incl. mobile) - 30% of cost to employer• Furniture - 1% p.m. of cost to employerDOING BUSINESS IN KENYA35