Doing Business in Kenya - RSM International

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A credit note should be serially numbered and should have the following details:• The name, address and the PIN of the person to whom it is issued; and• Sufficient details to identify the original invoice.Debit notes may be issued where there is a further charge on a supply already made.It should show all details required for a tax invoice and in addition, it should showdetails of the tax invoice issued at the time of the original supply.4.8.8 Bad DebtsWhere a person has supplied goods or services and has accounted for and paid taxon that supply but has not received payment from the buyer, he may apply for arefund or remission of the tax upon lapse of 3 years from the date of supply or if thebuyer has become legally insolvent. An application for refund in respect of bad debtsmust be made within 5 years from the date of supply.Under these conditions, an application can be made to the Commissioner for refundor remission of the tax involved. The application should be accompanied by:• A court decree to prove the insolvency of the debtor;• A copy of the tax invoice provided in respect of each taxable supply upon whichthe claim is based;• Records or other documents, showing that the tax has been accounted for andpaid on each supply upon which the claim for a refund of tax is based;• Evidence that every reasonable effort has been made to have the debt settled;and• A declaration by him that he and the buyers are independent of each other.4.8.9 Input TaxInput tax is tax paid by a registered person on the purchase or importation of goodsor services to be used by him for the purposes of his business.Registered suppliers are allowed to deduct the input tax charged to them on suppliesfrom output tax on supplies made by them in the course of furtherance of theirbusiness. The difference between the output tax and input tax is tax payable to KRAor recoverable from KRA (where input exceeds output).Where a registered person acquires as stock in trade any goods of which VAT has notbeen charged, he is to assume that the purchase price is inclusive of VAT and claiminput tax on such goods.Where a registered person claims input tax in respect of business premises usedin making taxable supplies and subsequently sells or disposes off the building or52DOING BUSINESS IN KENYA
converts it for use in the production of exempt supplies before the expiry of 5 yearsfrom the date of construction, he shall be required to refund such input within 30 daysof the sale, disposal or conversion. This does not extend to repairs and maintenancecosts incurred during the 5 year period.The VAT Order, 2002 specifies items on which tax may not be deducted, exceptwhere such goods are stock in trade. These include:• Oils for use in vehicles, ships, boats and other vessels;• Passenger vehicles and minibuses, including the leasing or hiring services ofsuch vehicles for internal use, unless they are provided on lease or hire to thirdparties, or are specifically designed or modified for use in the supply of taxableservices;• Bodies, parts and services for the repair of passenger vehicles and minibusesexcept where they are used in the supply of repairs and maintenance servicesor other taxable goods or services;• Furniture, fittings and ornaments of decorative items in buildings except wheresuch items are permanently attached to buildings, or for use in hotels andrestaurants subject to the approval of the Commissioner;• Household or domestic electrical appliances other than those approved by theCommissioner for use in the manufacture of taxable goods or the supply oftaxable services;• Entertainment services;• Restaurant services;• Accommodation services; and• Taxable supplies for use in staff housing and similar establishments for thewelfare of staff.General RuleVAT paid can be claimed as input tax:• Only by a taxable person;• If it is attributable to taxable supplies;• If the person claiming input VAT has a valid tax invoice;• If the person claiming input VAT has an original tax invoice from the supplier;and• The tax relates to supplies in respect of which the law does not expresslyprohibit the claiming of a credit.Time LimitInput tax cannot be deducted more than twelve months from the date the input taxbecame due and payable (see Section 4.8.6 - Time of Supply).DOING BUSINESS IN KENYA53
Page 7: 2.0 General2.1 IntroductionKenya li
Page 13 and 14: Kenya Tanzania Uganda Rwanda Burund
Page 15 and 16: A huge chunk of the Act regulates m
Page 17 and 18: • Stamping of the Memorandum of A
Page 19 and 20: the Registrar within a statutory pe
Page 21: 3.2.3 Thin CapitalisationThin capit
Page 24 and 25: Where a business is carried on or e
Page 26 and 27: territory or domestic market. Motor
Page 28 and 29: • Unrealised foreign exchange los
Page 30 and 31: 4.2.6 Business with Non-Resident Pe
Page 32 and 33: Installments Due Date RateNon-Agric
Page 34 and 35: The current Personal Income Tax rat
Page 36 and 37: c) Housing• The higher of market
Page 38 and 39: partnership in which the husband or
Page 40 and 41: (1) East African Community partner
Page 42 and 43: Where the taxpayer still disputes w
Page 44 and 45: The VAT rates applicable in Kenya a
Page 46 and 47: 4.8.4 De-registration and Disposal
Page 48 and 49: • Payment is received for all or
Page 50 and 51: 4.8.7 Records, Invoices, Credit and
Page 54 and 55: However, where a motor vehicle or o
Page 56 and 57: Where there is no tax payable a ‘
Page 58 and 59: granted or is partly granted, the b
Page 60 and 61: • Airtime on cellular mobile phon
Page 62 and 63: Transit VisasThese are visas requir
Page 64 and 65: Class K is for persons who have an
Page 66 and 67: 5.3.2 WagesAlthough the Employment
Page 68 and 69: NSSF provides the employee with a l
Page 70 and 71: 6.0 ACCOUNTING6.1 Statutory Framewo
Page 72 and 73: 7.0 INTELLECTUAL PROPERTYRIGHTSKeny
Page 74 and 75: Years 1 Shs 1,000Year 2 Shs 1,500Ye
Page 76 and 77: 8.0 Listing Rules8.1 The Capital Ma
Page 78 and 79: • At the date of application, the
Page 80 and 81: 8.3 Payable FeesCompanies pay an in
Page 82 and 83: 9.0 Investing in Kenya9.1 General I
Page 84 and 85: 9.3 Foreign Ownership of Shares and
Page 86 and 87: Contact Details - RSM AshvirRSM Ash
Page 88 and 89: Appendix of Acronyms used in the Bo
Page 90: Notes90DOING BUSINESS IN KENYA

Doing Business in Kenya - RSM International

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