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Certified Public Accountants & Management Consultants A correspondent firm of Horwath International

Tax & Financial Information

Updated Tax Information ----->

For additional or updated information please contact us

Please also see our newsletters index page for related tax articles

CORPORATE TAX RATES

For year of income 1998
Resident company 32.5%
Permanent establishment of non - resident company 40%
Export processing zone enterprise
first ten years NIL
next ten years 25%

CAPITAL ALLOWANCES

· Wear and tear allowance (calculated on cost, net of any investment deduction allowance, on a reducing balance basis)
Tractors, lorries > 3 tonnes and similar heavy self-propelled vehicles. 37.5%
Computer hardware, calculators, copiers and duplicating machines. 30%
Aircraft 25%
Motor Vehicles (if not commercial, limited to notional cost of Kshs. 500,000) 25% (PS - from 1999 - Kshs. 1,000,000)
Ships 12.5%
Plant and machinery, furniture and fittings and other equipment 12.5%
· Industrial buildings allowance (calculated on cost, net of any investment deduction allowance, on a straight line method)
Industrial buildings 2.5%
Hotels 4.0%
· Farm works allowance (on cost, straight line method)
Structures (excluding machinery) necessary for proper operation of a farm 33.3%
· Investment deduction allowance (on cost of buildings and machinery used for manufacturing purposes)
All eligible assets (single allowance) 60%
· Mining allowance (on capital expenditure incurred in mining specified minerals)
Year 1 is 40%
Year 2 - 7 is 10%

CAPITAL ALLOWANCES

Housing :
Where provided by the employer, the benefit is taxed at :
15% of total taxable emoluments where the employees income does not exceed Kshs. 600,000 per annum
Actual rent where the employees emoluments exceed Kshs. 600,000 p.a.
10% of employment income for agricultural employees
Soft Loans :
Loans made by employers to employees at favourable interest rates are taxed on the difference between market interest rate less actual interest paid on the loan.
Non - taxable benefits :
Medical services provided by an employer for a full time employee
The lowest of the actual pension/provident fund contribution to maximum of Kshs. 150,000 p.a. OR 30% of taxable employment income.
Payment by an employee of education fees of an employee's dependants or relatives
International passage costs paid by an employer for a non - citizen employee recruited outside Kenya

WITHHOLDING TAX RATES

{ Resident payee XXX Non - resident payee }
Management fees N/A XXX 20%
Royalties 5% XXX 20%
Dividends 5% XXX 10%
Interest 15% XXX 15%
Housing bond interest 10%(1) XXX 10%(1)
Rents N/A XXX 30%
Pensions N/A XXX 5%
Insurance commissions 10%(2) XXX 20%
Taxable withdrawals from pension/provident funds - withholding tax rates in bands apply
Contractual fees to unregistered individual 10%(3) 20%
- final tax

(1) limited to income of Kshs. 300,000 pa
(2) 5% if paid to a broker
(3) if fees in excess of Kshs. 24,000 per month

Please see the tax guide we have produced. If you would like to request a copy, or would like more information, check the contact information for the office nearest to you (Nairobi or London)

The content of this web page is intended to provide a general guide to the subject matter and should not be regarded as a basis for ascertaining the liability to tax or determining investment strategy in specific circumstances. In such cases, professional advice should be taken.

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