Tax Consultant

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Corporate taxation in Kenya

Income Tax, or the tax on income, is charged on income of a person (individual & or Companies) for each year in accordance with section 3(1) of the Income Tax Act.

S 3(1)’’..... a tax to be known as income tax shall be 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.’’

It is important to understand the words and phrases used in the taxation of income for easier interpretation. These include:

Year of income. Year of Income is a period of 12 months commencing 1 January and ending on 31 December in each year. It is the same as calendar year. Income tax is charged for each year of income.

The year of
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The foreign taxes paid are treated as allowable expenses except where a tax treaty applies in which case a tax credit is granted.
The tax incentives to corporate organization include 100% investment deduction on hotel building and on building and machinery used in manufacturing. Manufacturing investment in building and machinery situated within satellite towns adjoining Nairobi, Mombasa or Kisumu attract an investment allowance of 150% .Those enterprises operating under export processing zones enjoys a 10 years tax holiday.

Failing and payment of taxes: The self assessment tax returns must be filled within six months of the end of a company‘s accounting period. Tax installment are due within 20days of the end of each quarter year based on the relevant proportion of the estimated current tax or 110% of the tax for the prior year , less previous installment paid and withholding tax deducted at source with a balance of tax if any due 4 months after the company’s year end. Agricultural corporate organization makes their first installment payment 20 days after the third quarter.

It is worth noting that corporate organization being an employer have the legal responsibility of collecting and submitting Pay As You Earn (PAYE).it is also required to submit quarterly PAYE returns before the 10th of the month
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