Kenya Tax Law

This section gives you details on the Kenya Tax law.Below are some topics and a comprehensive introduction to the Kenya Tax law.

• Structure of taxation in Kenya
• Canons of a good tax system
• Classification of Taxes
• Indirect taxes
• Imposition of tax in Kenya
• Tax avoidance In Kenya

 An overview of Kenya tax law
Kenya Tax law is an area of legal study dealing with the statutory, regulatory, constitutional, and common-law rules that constitute the law applicable to taxation, which is the method by which the  Kenya government levies on economic transactions.

Forms of taxes and excises 
There are various types and forms of taxes under the Kenya tax law.This include:

• Personal income taxes

Income taxes on individuals are the most significant source of revenue in Kenya.
Personal income taxes under the Kenya tax law are imposed on the personal income of each person on a progressive basis, with higher rates applying to higher income levels. Unlike some other countries, personal income tax in Kenya is imposed on an individual and not on a family unit.
Individuals are also taxed on their share of any partnership or trust profits to which they are entitled for the financial year.  

•  Capital gains tax

Capital Gains Tax (CGT) in the context of the Kenya taxation system applies to the capital gain made on disposal of any asset, except for specific exemptions. CGT operates by having net gains treated as taxable income in the tax year an asset is sold or otherwise disposed of.  

• Corporate taxes 

Companies and corporations pay company tax on profits. Tax is paid on corporate income at the corporate level before it is distributed to individual shareholders as dividends 

• Goods and Services taxes

This is the tax that the Kenya Government levies a value added tax of a certain percentage on the supply of most goods and service.

•  Property taxes 

 The Kenya government are typically funded largely by taxes on land value (council rates) on residential, industrial and commercial properties.The government also levies stamp duties on transfers of land and other similar transactions.

•  Customs duties 

Customs duties under the Kenya tax law are imposed on many imported goods such as alcohol, tobacco products, perfume, and other items. Some of these goods can be purchased duty-free at duty free shops.

Kenya tax Law: imposition of tax

CHARGE OF TAX- Income tax is under Kenya law charged for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.Income upon which tax is chargeable is income in respect of -
(a) gains or profits from –
(i) a business, for whatever period of time carried on;
(ii) employment or services rendered
(iii) a right granted to another person for use or occupation of property;
(b) dividends or interest;
(c) (i) a pension, charge or annuity; and
(ii) any withdrawal from, or payments out of, a registered
pension fund, or a registered provident fund or a
registered individual retirement fund; and
(iii) any withdrawals from registered home ownership
savings plan.
(d) an amount deemed to be the income of a person under the Income Tax Act.

INCOME FROM BUSINESSES- Where a business is carried on or exercised partly within and
partly outside Kenya by a resident person, the whole of the gains or profits from that business shall be deemed to have accrued in or to have been derived from Kenya.The gains or profits of a partner shall under Kenya law be the sum of -
(i) remuneration payable to him by the partnership together with interest on capital so payable, less
interest on capital payable by him to the partnership; and
(ii) his share of the total income of the partnership, calculated after deducting the total of any
remuneration and interest on capital payable to any partner by the partnership and after adding
any interest on capital payable by any partner to the partnership.;

INCOME FROM EMPLOYMENT- This applies to-
(a) a person who is, or was at the time of the employment or when the services were rendered, a resident person in respect of any employment or services rendered by him in Kenya or outside Kenya; or
(b) a non-resident person in respect of any employment with or services rendered to an employer who is resident in Kenya or the permanent establishment in Kenya of an employer who is not so resident.

 Other forms of incomes that are taxed under Kenya laws include:

• Income from Property,
• Income from dividends,
• Income from pensions
• Income from management or professional fees, royalties, interest and rents,
• Income of certain nonresident persons deemed derived from Kenya .