THE TAX LAWS AMENDMENT ACT 2020

The Law was enacted on 25th April 2020 and is an addition to The Value Added Tax (Amendment of the Rate of Tax) Order, 2020.

The Legal Notice number 35 of 2020, reduced the VAT rate from 16% to 14% with effect from 1st April 2020. The change is expected to affect VAT returns submission for the month of April 2020.

Both Acts give effect to the Presidential directives announced by H.E. President Uhuru Kenyatta on 25th March 2020.

Notable changes are;
1) Reduction of personal income tax top rate.
2) Reduction of the residential corporate tax rate.
3) Reduction of Turnover Tax (TOT).

The Tax Laws Amendment Act 2020, makes several changes to them;
1) Income Tax Act CAP 470
2) VAT Act 2013
3) Excise Duty Act
4) Tax Procedures Act
5) Miscellaneous Levies and Fees Act
6) Kenya Revenue Authority Act (CAP 469)

1) INCOME TAX ACT

1.1 Income Tax Rates – Corporate Entities (Effective on 25th April 2020)

• The rate of Corporate Income Tax for resident companies has been reduced to 25% (The lowest in the East African Community). We expect this change to take effect for companies whose year-ends are after April 2020.
• Non-resident companies will continue paying corporate tax at 37.5%.
• Newly listed companies will now be taxed at 25%. Previous tax rates ranged from 20% to 27.5%.
• Companies operating a plastics recycling plant which were subject to tax at the rate of 15% in the Finance Act 2019 will now be subject to 25% corporate income tax.
• Companies under a Special Operating Framework Arrangement with the Government will now be subject to 25% corporate tax. Companies currently under SOFA will continue paying the agreed preferential Corporate Income Tax for the specified period in the agreement.

1.2 Income Tax Rates – Individual (Effective on 25th April 2020)

• Reduction of personal income tax top rate from 30% to 25%.
• Increase in personal relief from 16,896/- p.a to 28,800/- p.a
• Income below Kshs. 24,000 per month will not be subject to any tax.

The individual tax rates have been amended as follows;

ANNUAL INCOME MONTHLY INCOME TAX RATE
On the first Kshs. 288,000 On the first Kshs. 24,000 10%
On the next Kshs. 200,000 On the next Kshs. 16,667 15%
On the next Kshs. 200,000 On the next Kshs. 16,667 20%
On all income above Kshs. 688,000 On all income above 57,334 25%
Personal relief Kshs. 28,800 Personal relief Kshs. 2,400

1.3 Pension withdrawals tax rates (Effective on 25th April 2020)

• Withdrawals from pensions after the expiry of 15 years from the date of joining the fund, will be taxed at 25% for funds drawn in excess of Kshs. 1.2 million p.a.
• Withdrawals before the expiry of 15 years from the date of joining the fund, the tax rates have been adjusted to be in line with the new individual tax rates.

AFTER 15 YEARS EXPIRY BEFORE 15 YEARS EXPIRY TAX RATES
First Kshs. 400,000 First Kshs. 288,000 10%
Next Kshs. 400,000 Next Kshs. 200,000 15%
Next Kshs. 400,000 Next Kshs. 200,000 20%
Above Kshs. 1,200,000 Above Kshs. 688,000 25%

• Surplus funds withdrawn by or refunded to an employer in respect of registered funds and pension will be taxed at 25%.

Illustrations – How salaries have been affected

TAXABLE SALARY TAKE HOME (NEW) TAKE HOME (OLD)
Kshs. 20,000 Kshs. 20,000 Kshs. 19,185
Kshs. 30,000 Kshs. 29,400 Kshs. 27,433
Kshs. 50,000 Kshs. 46,933 Kshs. 42,668
Kshs. 100,000 Kshs. 83,249 Kshs. 77,668
Kshs. 250,000 Kshs. 195,749 Kshs. 182,668
Kshs. 500,000 Kshs. 383,249 Kshs. 357,668
Kshs. 1,000,000 Kshs. 758,249 Kshs. 707,668

1.4 Deleted Exemptions (Previously Exempt Incomes and Persons) (Effective 25th April 2020)

Most incomes that relate to organisations and agreements that no longer exist. In some cases, the exemptions were not achieving their intended objectives while some organisations have now matured to allow them pay their share of taxes.
Incomes of the following are no longer exempt under the First Schedule;
• Income from certain state boards and authorities including Pyrethrum Board of Kenya, Sisal Board of Kenya, Kenya Dairy Board, Canning Crops Board, Central Agricultural Board, Pig Industry Board, Pineapple Development Authority, Horticultural Crop Development Authority, National Irrigation Board, Mombasa Pipeline Board, Settlement Fund Trustees, Kenya Post Office Savings Bank; and Cotton Board of Kenya (Paragraph 4).
• Profits made by the Agricultural Society of Kenya from an exhibition held for purposes of the society (Paragraph 7).
• Interest on tax reserve certificates which may be issued by authority of Government.
• Gains on the transfer of shares of a local authority (CGT).
• Gains on the transfer of land adjudicated under the Land Consolidation Act and Land Adjudication Act when the title has been registered under the Registered Land Act and transferred for the first time (CGT).
• Interest earned on contributions paid into the Deposit Protection Fund (Paragraph 40)
• Interest earned on loans granted by the Local Government Loans Authority established under the Local Government Loans Act.
• Dividends received by a registered venture capital company.
• Gains from the trade in shares of a venture company earned by a registered venture company within the first ten years from the date on first investment in that venture company by the venture capital company (Paragraph 47).
• Interest income generated from cash flows passed to the investor in the form of asset backed securities (Paragraph 52).
• Dividends paid by a registered special economic zone enterprise, developer and operator to non-resident persons (Paragraph 55).
• Emoluments of an officer of the Desert Locust Survey who is not resident in Kenya (Paragraph 25).
• Employment income of US Citizens who are employed by the Department of Agriculture of the US on research work in co-operation with Government.
• Payment to a person employed in the public service in respect of disturbance made in connection with a change in the constitution of the Government of a Partner State (Paragraph 18).
• Education grant paid by the Government of the United Kingdom to a person employed in the public service of Kenya.
• The Income received by way of remuneration under any contract which was entered into consequent upon financial assistance being received from the International Co-operation Administration (Paragraph 29).
• Gains or profits resultant from any reward paid by the United Kingdom Atomic Energy Authority for the discovery of Uranium in Kenya (Paragraph 31).
• Such part of the income of the East African Power and Lighting Company and Income of the General Superintendence Company Limited (Paragraph 33 and 34).
• Compensating tax accruing to a power producer under a Power Purchase Agreement (PPA’s) (Paragraph 56).
• Part II of the First Schedule has been repealed entirely.
1.5 Turnover Tax and Presumptive Tax (Effective on 25th April 2020)

The Act has introduced several changes to the Turnover Tax provisions
• Reduction of the turnover tax rate from 3% to 1% on gross revenues, payable monthly.
• Increase of the annual gross revenue threshold from Kshs. 5 million to Kshs. 50 million p.a.
• Introduction of a minimum threshold of Kshs. 1 million p.a for registration of turnover tax.
• Incorporated entities can now register for turnover tax.
• Presumptive tax provisions have now been repealed.

* Professional and management fees and rental incomes are not subject to Turnover tax.
* VAT threshold remains at Kshs. 5 million of gross revenues p.a.

Clarifications sought
1) Are businesses whose income falls below the Kshs. 1 million p.a. exempt from any Tax?
2) What happens to revenues earned prior to the date of registration for tax purposes?
3) Can businesses opt to remain under the Income Tax regime?
4) Will there be a consideration for a unified treatment of entities earning professional incomes?

Previous regulations include;
• 3% TOT on gross turnover. No expenses deductible.
• Gross turnover should not exceed 5 million a year.
• TOT does not apply to Limited Companies, Employment Income, Management Income, Professional Income, Rental Income and VAT registered individuals’ or businesses with over 5m turnover a year.
• Commissioner approval is required to remain in the normal income tax regime.
• Late submission penalty – Kshs. 5,000 for each month.

1.6 Qualifying Interest (Effective 25th April 2020)

The Tax Laws Amendment Act has revised the definition to now include all interest received by a resident individual. Qualifying interest is subject to a final withholding tax of 15%.

1.7 Withholding Tax (Effective 25th April 2020)

• 15% on dividends paid to non-residents.
• 20% on sales promotion, marketing, advertisement services and transportation of goods (excluding air and shipping) paid to non-residents. Withholding tax will NOT APPLY on payment for the transport of goods to EAC citizens.
• 5% on re-insurance premiums excluding aviation insurance premiums.

1.8 Capital Gains Tax (Effective 25th April 2020)

Income now subject to CGT include;
• Shares of a Local Authority.
• Shares in the Stock or Funds of the Government, the High Commissioner or the Authority established under the Organisation or the Community.
• Land adjudicated under the Land Consolidation Act and Land Adjudication Act when the title has been registered under the Registered Land Act and transferred for the first time.

The above is now obsolete and may no longer be applicable.

1.9 Electricity Expenses (Effective 25th April 2020)

Provisions for the 30% electricity rebate above the normal electricity expense awarded to manufacturers has been deleted.

1.10 Capital Allowances (Effective 25th April 2020)

The Act has deleted the Second Schedule of the Income Tax Act (Investment allowances and capital deductions) and replaced it with a new schedule – “Investment Allowance”.

The rate of capital allowances has been rationalized to a maximum of 100% (The attractive investment deduction of 150% of capital investment outside certain municipalities has been abolished). Claims are also now to be made on a reducing balance basis.

The main highlight, however, is the introduction of decelerated claims e.g. 50% in the first year of investment while the residual to be claimed at different rates (10% or 25%) on a reducing balance basis.

The provision allows the taxpayer to decide whether they want to claim the allowance or not. Moreover, expenditure incurred by a person on behalf of another person shall not qualify.

In the case of the 150% investment deduction on Kshs 5 billion and over incurred in the construction of bulk storage and handling facilities supporting the SGR with a minimum storage capacity of 100,000 metric tonnes of supply, the proposed deduction shall remain in force till 31st December 2021 (transitional provision).

1.10.1 Allowances on Buildings

New Rate Previous Rate
Hotel Building (Licensed by Relevant Authority) • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently. 10%
Hospital Buildings (Licensed by Relevant Authority) • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently N/a
The building used for Manufacture including Structural and Civil works that are part and contribute to the use of the building. • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 100%
Petroleum or gas storage facilities • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 100%
Educational buildings including student hostels (Licensed by Relevant Authority) • 10% per year, on reducing balance 50%
Commercial buildings include
a) building used as an office, shop, showroom, godown, storehouse, or warehouse used for storage of raw materials for the manufacture of finished or semi-finished goods; or
b) civil works relating to water or electric power undertaking, but does not include an undertaking not carried on by way of trade • 10% per year, on reducing balance 25%

*in the case of change of use of a building, the deduction shall be restricted to the residual value or unclaimed amount at the applicable new rate (decelerated).

*Land does not form part of the qualifying cost for the allowances.

1.10.2 Allowances on Machinery and other Capital Items

New Rate Previous Rate
Machinery used for manufacture and includes machinery used for the following ancillary purposes —
(i) generation, transformation and
distribution of electricity;
(ii) clean-up and disposal of effluents and other waste products;
(iii) reduction of environmental damage;
(iv) water supply or disposal;
(v) maintenance of the machinery; or
(vi) scientific research and
development

Manufacture” means the making,
including packaging, of goods from raw
or semi-finished goods, or the generation
of electrical energy for supply to the
national grid, or the transformation and
distribution of electricity through the
national grid, but does not include design,
storage, transport, administration or any
other ancillary activity
• 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 100%
Hospital equipment • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 12.50%
Ships • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 100%
Aircrafts • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 25%
Motor vehicles
*Qualifying costs for saloon cars is now up to Kshs. 3,000,000 (Previously Kshs. 2,000,000)
*Sale proceeds apportioned between the original purchase price and Kshs. 3,000,000
• 25% per year, on reducing balance 25%
Heavy Earthmoving equipment • 25% per year, on reducing balance 37.5%
Computer Software • 25% per year, on reducing balance 20% Straight Line
Computers and peripheral computer hardware, calculators, copiers and duplicating machines • 25% per year, on reducing balance 30%
Furniture and fittings not claimed elsewhere • 10% per year, on reducing balance 12.5%
Telecommunications equipment • 10% per year, on reducing balance 20%
Filming equipment by a local film producer licensed by the Cabinet Secretary responsible for filming • 25% per year, on reducing balance 100%
Machinery used to undertake operations under a prospecting right • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 100% (Ninth Schedule – Not deleted)
Machinery used to undertake exploration operations under a mining right • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 100% (Ninth Schedule – Not deleted)
Other machinery • 10% per year, on reducing balance 12.5%
Purchase or an acquisition of an indefeasible right to use fibre optic cable by a telecommunication operator • 10% per year, on reducing balance 5%
Farm works
(Not defined in the Act) • 50% per year, in the first year of use
• 25% per year, of residual value on reducing balance subsequently 100%

*Expenditures incurred on behalf of a person by another person, shall not qualify for the deduction under this Schedule.

1.10 Proposals in the Tax Amendments Bill that were rejected by Parliament

a) Allowable expenses
The following expenses which the Bill had proposed have been retained as deductible expenditures;
• Legal costs, incidental expenses and rating costs for listing on any securities exchange operating in Kenya.
• Capital expenditure incurred on the construction of social infrastructure.
• Contributions to Registered Home Ownership Plans.
• Subscriptions and fees to trade associations.
• Club subscriptions paid by an employer on behalf of an employee.
b) The exemption from capital gains for individuals on the sale or transfer of private residences where the owner had lived in the property for 3 years prior to disposal, transfers of land not exceeding KES 3 million and agricultural land of less than 50 acres situate outside municipalities, gazetted townships or urban area have been retained as income exempt from capital gains tax.
c) Exemptions for the following classes of income have been maintained:
• Interest of a registered home ownership savings plan;
• Income of the National Social Security Fund;
• Income of the National Hospital Insurance Fund.
• Investment income of a pooled funds of a registered retirement benefits scheme.
• Interest income accruing from listed bonds, notes or other similar securities used to raise funds for infrastructure and other social services with a maturity of at least three years;
• Interest income accruing from listed bonds, notes or similar securities used to raise funds for infrastructure, projects and assets defined under Green Bonds Standards and Guidelines, and other social services with a maturity of at least three years; and
• Monthly or lump sum pensions granted to a person who is sixty-five years of age or more.
• Income of an officer of the Government or Community, accrued in or derived from Kenya which consists of foreign allowances.

2) VALUE ADDED TAX (V.A.T) ACT

2.1 Taxable value of Petroleum Products (Tax base) (Effective on 15th May 2020)

Computation for Vat will now include excise duty, fees and other charges.

2.2 Issuance of Credit Notes (Effective on 25th April 2020)

The law requires that credit notes be issued within 6 months from the date of the invoice.

This has now been amended to provide that where there is a commercial dispute in court with regard to the price payable, which takes more than six months to resolve, a credit note will be issued within 30 days after determination of the dispute.

2.3 VAT Refunds arising from Bad Debts (Effective on 25th April 2020)

The period within which a refund for VAT on bad debts is to be applied has been reduced from 5 years to 4 years from the date the supply was made.

2.4 Keeping of records (Effective on 25th April 2020)

All persons, whether registered for VAT or not, should maintain transactions records for a five-year period.

2.5 Reclassification of supplies under the VAT schedules (Effective 25th April 2020)

Paragraph Item
First Schedule, Part I Section A (Goods) Previous VAT Status New VAT Status
96A Personal protective equipment, including facemasks for use;
• By medical personnel in registered hospitals and clinics or
• By members of the public in the case of a pandemic or a notifiable infectious disease 14% Exempt
27 Plants and Machinery of Chapter 84 and 85 used for manufacture of goods Exempt 14%
29 Taxable supplies, excluding motor vehicles for direct and exclusive use in the construction of a power generating plant to supply electricity to the national grid approved by the relevant authorities Exempt 14%
30 Taxable supplies, excluding motor vehicles, for direct and exclusive use in geothermal, oil or mining prospecting or exploration upon recommendation by the CS for Energy or Mining Exempt 14%
30A Taxable supplies procured locally or imported for the construction of liquefied petroleum gas storage facilities with a minimum capital investment of Kshs. 4 billion and a minimum storage capacity of 15,000 metric tonnes Exempt 14%
52 Plastic bag biogas digesters Exempt 14%
52A Biogas Exempt 14%
52B Leasing of biogas producing equipment Exempt 14%
53 Parts imported or purchased locally for the assembly of computer Exempt 14%
55 Taxable goods purchased or imported for direct and exclusive use in the construction and infrastructural works in industrial parks of one hundred acres or more including those outside the SEZ approved by the CS for the National Treasury. Exempt 14%
60 Museum and natural history exhibits and specimens and scientific equipment for public museums. Exempt 14%
61 Chemicals, reagents, films, film, film strips and visual aid equipment imported or purchased prior to clearance through customs by the National Museums of Kenya Exempt 14%
88 Goods falling under tariff number 4907.00.90 (Postage Stamps) Exempt 14%
93 Materials for the construction of grain storage Exempt 14%
94 The transfer of a business as a going concern by a registered person to another registered person Exempt 14%
97 Taxable goods supplied to marine fisheries and fish processors Exempt 14%
102 Goods purchased for direct and exclusive use in the implementation of projects under a special operating framework arrangement with the Government Exempt 14%

Paragraph Item
First Schedule, Part II (Services) Previous VAT Status New VAT Status
10 Insurance agency, insurance brokerage, securities exchange brokerage from paragraph 10.

Tea and coffee brokerage services have been retained as exempt Exempt 14%
22 Taxable services provided for direct and exclusive use in the construction and infrastructural works in industrial parks of one hundred acres or more including those outside the SEZ approved by the CS for the National Treasury. Exempt 14%
28 Taxable services procured locally or imported for the construction of liquefied petroleum gas storage facilities with a minimum capital investment of Kshs. 4 billion and a minimum storage capacity of 15,000 metric tonnes Exempt 14%
30 Asset transfers and other transactions related to the transfer of assets into real estate investment trusts and asset backed securities Exempt 14%
31 Services purchased for direct and exclusive use in the implementation of projects under a special operating framework arrangement (SOFA) with the Government Exempt 14%

Paragraph Item
Second Schedule, Part C (Medicaments) Previous VAT Status New VAT Status
3002.20.00 Vaccines for human medicine 0% Exempt
3002.30.00 Vaccines for veterinary medicine 0% Exempt
3003.10.00 Medicaments containing penicillin or derivatives thereof, with penicillanic acid structure, or streptomycin or their derivatives 0% Exempt
3003.20.00 Medicaments containing antibiotics, nesoi, not put up in dosage form and not packaged for retail 0% 14%
3003.39.00 Other medicaments, containing hormones or other products of heading No. 29.37 but not containing antibiotics, not put up in measured doses or in forms of packing for retail sale. 0% Exempt
3003.40.00 Medicaments containing alkaloids or derivatives thereof but not containing hormones or other products of heading No. 29.37 or antibiotics, not put up in measured doses or in forms or packing’s for retail sale. 0% Exempt
3003.90.00 Other 0% Exempt
3003.90.10 Infusion solutions for ingestion other than by mouth not put up in measured doses or in forms or packing’s for retail sale 0% Exempt
3003.90.90 Other medicaments (excluding goods of heading No. 30.02, 30.05 or 30.06) consisting of two or more constituents which have been mixed together for therapeutic or prophylactic uses, not put up in measured doses or in forms or packing’s for retail sale. 0% Exempt
3004.10.00 Medicaments containing penicillin’s or derivatives thereof, with a penicillin acid structure or streptomycin’s or their derivatives, put up in measured doses or in forms or packing’s for retail sale. 0% Exempt
3004.20.00 Medicaments containing other antibiotics, put up in measured doses or in forms or packings for retail sale 0% Exempt
3004.32.00 Medicaments containing adrenal cortical hormones, put up in measured doses or in forms or packing’s for retail sale 0% Exempt
3004.39.00 Other medicaments containing hormones or other products of heading No. 29.37 but not containing antibiotics, put up in measured doses or in forms or packing’s for retail sale 0% Exempt
3004.41.00 Containing ephedrine or its salts 0% Exempt
3004.42.00 Containing pseudoephedrine (INN) or its salts 0% Exempt
3004.43.00 Containing norephedrine or its salts 0% 14%
3004.49.00 Other 0% Exempt
3004.50.00 Other medicaments containing vitamins or other products of heading No. 29.36 put up in measured doses or in forms or packing’s for retail sale 0% Exempt
3004.90.00 Other medicaments (excluding goods of heading No. 30.02, 30.05 or 30.06) consisting of mixed or unmixed products, for therapeutic or prophylactic uses, put up in measured doses or in forms or packings for retail sale 0% Exempt
3004.90.90 Other medicaments (excluding goods of heading No. 30.02, 30.05 or 30.06) consisting of mixed or unmixed products, for therapeutic or prophylactic uses, put up in measured doses or in forms or packings for retail sale 0% Exempt

2.6 Proposals in the Tax Amendments Bill that were rejected by Parliament
1. The following items that the Bill had proposed to remove from the exempt schedule have been retained and the items thus remain exempt from VAT:
a. fertilisers;
b. taxable supplies for the construction of liquefied petroleum gas storage facilities;
c. specialised equipment for the development and generation of solar and wind energy, including deep cycle batteries which use or store solar power;
d. entry fees into national parks and national reserves/services of tour operators, excluding in-house supplies;
e. inputs or raw materials supplied to solar equipment manufacturers for the manufacture of solar equipment or deep cycle-sealed batteries which exclusively use or store solar power;
f. plant, machinery and equipment used in the construction of a plastics recycling plant;
g. helicopters, airplanes, other aircraft of unladen weight not exceeding 2,000 kg as well as other ground flying trainers and parts of airplanes and helicopters;
h. made up fishing nets of man-made textile material of tariff number 5608.11.00;
i. mosquito nets of tariff number 6304.91.10;
j. materials, waste, residues and byproducts, whether or not in the form of pellets, and preparations of a kind used in animal feeding;
k. tractors other than road tractors for semitrailers;
l. inputs or raw materials locally purchased or imported by manufacturers of agricultural machinery and implements upon approval by the Cabinet Secretary for Industrialization; and
m. Inputs for the manufacture of pesticides.
2. The following items that were proposed to be classified as exempt by the Bill have been moved back to zero-rated:
a. ordinary bread; and
b. Milk and cream, not concentrated nor containing added sugar or other sweetening matter of the specified tariffs.
3. The following items that the Bill had proposed to remove from zero-rating have been retained as zero-rated:
a. agricultural pest control product;
b. inputs or raw materials for electric accumulators and separators including lead battery separator rolls whether or not rectangular or square supplied to manufacturers of automotive and solar batteries in Kenya; and
c. taxable goods supplied to marine fisheries and fish processors upon recommendation by the relevant state department
3) EXCISE DUTY ACT

The definition of “other fees” has been amended by deleting in its definition the words ‘licensed financial institutions’ and replacing with ‘licensed activities’

This provides clarity in that excise duty will now apply to fees, charges or commissions charged by all financial institutions relating to their licensed activities.

The imposition of excise duty

The Act has introduced excise duty on following items, previously exempt;
• Goods imported or purchased locally for direct and exclusive use in the implementation of projects under a special operating framework arrangement (SOFA) with the Government
• One personal motor vehicle, excluding buses and minibuses of seating capacity of more than eight seats, imported by a public officer returning from a posting in a Kenyan mission abroad and another motor vehicle by the spouse and which is not exempted from Excise Duty under the Second Schedule (Returning public officers are already entitled to exemption as persons changing residence or returning residents)

The excisable rates are dependent on the tariffs.

*The proposals are effective 25th April 2020

4) THE TAX PROCEDURES ACT, 2015

4.1 Private Rulings

• The number of days, from the date of application, within which the Commissioner is required to issue a private ruling has been extended from 45 days to 60 days.
• The Commissioner is no longer required to publish private rulings. This ensures the Commissioner does not break confidentiality requirements under the Law.

4.2 Late Filing Penalties

• Penalty for submission of Turnover Tax return has been reduced from Kshs. 5,000 to Kshs. 1,000.

*The proposals are effective 25th April 2020

5) MISCELLANEOUS FEES AND LEVIES ACT, 2016

5.1 Railway Development (Effective 25th April 2020)

The purpose of the levy has been expanded to provide funds for construction and operation

Items previously exempt that re now chargeable to RDL
• Raw materials for direct and exclusive use in construction by developers and investors in industrial parks
• Goods imported for the construction of liquefied petroleum gas storage facilities as approved by the CS responsible for LPG
• Goods imported for implementation of projects under a Special Operating Framework Arrangement with the Government.

5.2 Processing fee on Duty-Free Vehicles (Effective 25th April 2020)

The processing fee of Kshs. 10,000 for duty-free vehicles is now applicable under the Miscellaneous Fees and Levies Act, 2016 (Previously was under the repealed Customs and Excise Act).

5.3 Import Declaration Fee (IDF) (Effective 25th April 2020)

Items previously exempt that re now chargeable to RDL
• Raw materials for direct and exclusive use in construction by developers and investors in industrial parks
• Goods imported for the construction of liquefied petroleum gas storage facilities as approved by the CS responsible for LPG
• Samples which in the opinion of the Commissioner have no commercial value.
• Gifts or donations, excluding motor vehicles, by foreign residents to their relatives in Kenya for their personal use.

6) KENYA REVENUE AUTHORITY ACT CAP 469

6.1 Reward for information leading to enforcement of tax laws (Effective 25th April 2020)

A reward of Kshs. 500,000 will be payable for information provided to the Commissioner that leads to the enforcement of the Tax Laws.

6.2 Appointment of agents (Effective 25th April 2020)

KRA has been empowered to appoint agent banks for collection of tax revenues. The appointed banks are required to transfer funds collected within 2 days following the date of collection. Penalty for late remittance is 2% of the collections compounded for each day the amount is not transferred.
Contacts

CPA Ahmed Yusuf Salyani
Managing Partner
asalyani@acegroup.co.ke

CPA Mohamed Abdulla Ebrahim
Managing Partner
mebrahim@acegroup.co.ke

CPA Bilal Aslam Musani
Tax Director
bmusani@acegroup.co.ke

CPA Mohamed Yusuf Salyani
Director – Consulting
msalyani@acegroup.co.ke

CPA Mohamed Afzal Mamdani
Audit Partner
mamamdani@acegroup.co.ke

Disclaimer

The information contained herein is not intended to address any circumstances of any corporate, entity, business or individual. Ace Taxation Services Limited, has tried, in the most possible way, to provide information that is accurate. However, there is no guarantee that such information is going to remain accurate at the date it is received by any corporate, entity, business or individual.
ACE Group holds no responsibility should any corporate, entity, business or individual act on such information or data without seeking further advice.