Doing Business in Kenya - RSM International

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Where there is no tax payable a ‘NIL’ return is required.The VAT 3A form should accompany the VAT Return where the input tax incurredis Shs 3 million or more for a Nairobi trader, or Shs 1.5 million or more for otherdistricts.A VAT 3B form analysing all zero-rated supplies should also be submitted where zeroratedsales are made.Payments can be made at designated banks using Real Time Gross Settlement(RTGS), banker’s cheques or cash. All cheques should be crossed “Account PayeeOnly” and made to the Commissioner of Value Added Tax. The following mandatoryinformation is required in respect of the payer - name, taxpayer registration number,e-slip number and amount of VAT remitted.Refund of TaxIf for any tax month the input tax claimed exceeds output tax, the excess is carriedforward in the VAT return to be set-off against the tax payable in the following month.However, in the following circumstances, the Commissioner will refund tax:• The amount of input tax exceeds the amount of output tax as a result of thetrader making zero-rated supplies; or• Where taxable goods have been manufactured in or imported into Kenya andtax has been paid in respect of those goods and, before being used, those goodsare subsequently exported under customs control; or• Where tax has been paid in error; or• Where in the opinion of the Minister, it is in the public interest to do so.All VAT refund claims shall be lodged within a 12 month period from the date therefund arose or such longer period not exceeding 24 months as the Commissionermay allow. All refund claims above Shs 1 million shall be accompanied by an AuditorsCertificate that the application is true and the amount is properly refundable underthe Act. An auditor is also required not later than 20th of the following month tofurnish a certificate to the Commissioner showing all the claims certified by himduring the last month.Recovery of TaxThe Commissioner has been granted very wide powers under the VAT Act to collecttax that is due and payable. These include:• The Commissioner is empowered to order and empower an authorised officer(with or without a police officer being present) to exercise distress upon thegoods and chattels of the person from whom tax is recoverable. A distresslevied shall be kept for ten days during which the taxpayer can pay the taxand distress costs to recover the goods and chattels distrained upon or elsethey shall be sold by public auction. The proceeds from the auction shall first56DOING BUSINESS IN KENYA
e applied towards the costs of levying the distress, keeping and selling thedistrained goods and finally, towards tax. Any amounts remaining shall be paidto the distrainee.• The Commissioner may recover money by issuing an agency notice. He may bynotice require any person:• From whom money is due or accruing or may become due to the taxableperson.• Who holds or may subsequently hold money on account of the taxableperson.• Who holds or may hold money on account of some other person forpayment to the taxable person.• Any person having authority from some other person to pay money to thetaxable person.Where the person does not hold any funds, he is required to inform the Commissionerwithin 7 days of receiving the notice.• If there is likelihood of the person to frustrate collection of the tax, theCommissioner may apply to the High Court to obtain an order prohibitingtransfer, withdrawal or disposal of the funds. Within 30 days of the order, orany extension given by the Court upon application by the Commissioner, theCommissioner is required to issue an assessment, which shall automaticallyremove the order. The taxpayer has 15 days after the service of the order tomake an application challenging the order.• Charge of property and subsequent sell. Where a person liable for tax fails toremit the tax within the prescribed time, the Commissioner may, by notice inwriting, inform the person of his intention to apply to the Registrar of Lands toattach any land and buildings owned by the person. If within 30 days of suchnotice, the tax remains unpaid, the Commissioner may by notice in writing,direct the Registrar of Lands to hold the land and buildings as security. TheCommissioner is now empowered to sell land and buildings to recover tax. Theproceeds from the sale firstly apply towards the selling costs and then recoveryof tax. Any surplus is paid to the taxpayer.• The Commissioner is empowered to recover outstanding tax as a civil debt dueto the Government, where he has reasonable belief that:• taxable supplies were made and no tax was charged; or• tax was charged but not remitted to the Authority; or4.8.12 VAT PenaltiesThe VAT Act provides for various penalties in case of non-compliance. TheCommissioner has discretionary powers under the Act to remit penalties and interestnot exceeding Shs 1.5 million. For amounts in excess of this, an application has to bemade to the Minister, through the Commissioner. Where an application is made forremission, the Commissioner will suspend charging of interest where the taxpayerhas paid the principal tax pending hearing of the application. Where remission is notDOING BUSINESS IN KENYA57
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 52 and 53: A credit note should be serially nu
Page 54 and 55: However, where a motor vehicle or o
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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