Kenya: tax aspects

Tax Laws (Amendment) Act 2018

The Tax Laws (Amendment) Act (TLAA) was assented into law on 18th July 2018. The Act contains some new provisions that were not contained in the Finance Bill 2018.

Hereunder is a summary of the key provisions and effective dates:

  • Compensating tax: a new paragraph is introduced and provided exemption from payment of compensating tax accruing to power producers with a power purchase agreement (effective date: 1st July)
  • Valuation of immovable property on transfer/sale: the TLAA amends the Stamp Duty Act by introducing the statement “or a registered and practicing valuer”, the valuation of immovable property to determine the true market value of said property can now be carried out by either the Chief Government Valuer, or a registered and practicing valuer (effective date: 1st October)
  • Exemption from VAT on transactions relating to the transfer of a business as a going concern by a registered person to another registered person (effective date: 1st July)

2018 Budget insights

  • Clarification of the applicability of Capital gains tax on insurance companies
  • 15% presumptive income tax introduced for traders
  • Expansion of the scope of deemed dividend
  • Repeal of compensating tax and introduction of tax on dividends distributed from untaxed profits
  • Special tax rates under a special operating framework with the government (Public Private Partnership)
  • Introduction of 20% withholding tax on demurrage charges
  • Introduction of a Robin hood tax on money transfer (financial transactions tax)
  • Alternative dispute resolution anchored in the law
  • Responsibility of tax representatives
  • Guidelines for application for extension of time to submit tax returns
  • Late payment interest rate increased and late submission penalty for tax returns
  • Exemption from stamp duty