Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.
Yes we tax in Kenya
New tax reform: No specific information
New tax treaties:
- Tax treaty between Kenya and Republic of Korea enters into force.
Local tax advisors
No specific information on the local tax advisors.
Local tax administration
The definition of Permanent Establishment follows the wording of article 5 of the OECD Model:
- Dependent agent who habitually concludes contracts in the name of a non-resident company (except is the activity is limited to purchase of goods);
- Fixed place of business, building site, construction, assembly or installation and any related supervisory activity, for a period of 6 months.
The definition of resident company for tax purposes, corresponds to the definition of the OECD Model Convention. As per article 4 of the OECD Model Tax Convention, a person is treated as resident of a contracting state if he is liable to tax in such a country by virtue of his domicile, residence or place of management or any other similar criterion.
Entities are considered to be resident for tax purposes in Kenya if their place of management & control is in Kenya.
Note: the definitions of permanent establishment and place of residence are subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 30% for resident companies and 37.5% for non-resident companies.
Non-taxable income includes the following:
- Dividends provided that the distributing company is held more than 12.5%;
- Capital gains are taxed separately;
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption
- Interest in excess of the thin-capitalization threshold
- Fines and penalties
- CIT and similar taxes
Carry forward: Yes 9 years, but some restrictions may apply
Carry back: No
Companies should submit the tax return annually.
Annual tax returns are established by the company on a self-assessment system.
Whithholding Taxes (payment to foreign companies)
The local tax rates in Kenya are the following, subject to the provisions of an applicable double tax treaty, if any.
There is no WHT on the profits paid from a branch to its foreign head office.
The general rate of WHT on dividends is 10%.
The general rate of WHT on interest is 15%.
The general rate of WHT on Royalties is 20%.
The general rate of WHT on management fees is 20%.
The general rate of WHT on technical services is 20%.
Capital gains are taxed separately under a 5% tax rate.
Standard VAT tax rate is 16%
Zero-rated supplies include, subject to certain conditions:
- exports of goods and services;
- Vessels and Aircraft engaged in commercial international traffic;
Exempt supplies include, subject to certain conditions:
- Certain financial services;
- Insurance services;
- Medical services;
- Training and education
Note: exempt transactions differ from zero-rated transactions in that the input VAT associated with exempt transactions is not deductible.
Non-resident companies (which are not required to register and incur Kenya VAT in the course of their business activities in Kenya) may apply for a refund, in the same conditions than resident companies.
No other specific information of VAT in Kenya.
The general statute of limitation is 7 years starting at the end of the year in which the tax return had to be filed.
There is no foreign exchange control in Kenya. Income and capital can be freely repatriated.
Note: in practice it is easier to repatriate income and capital from a branch than a subsidiary.
There are thin capitalization rules in Kenya. The interests derived from loans between related parties may not be deductible in case where interest exceeds some ratios.
Do not hesitate to share your experience in Kenya with us in the comments below. Any comments are welcome !