| Income Tax Department
administers various direct taxes, which have different rates:
PAYE is a method of collecting tax at source from individuals in
gainful employment. The employer deducts a certain amount of tax
from his / her employee's salary or wages on each payday then remit
the tax to the Authority. This relieves the employee from paying
taxes at the end of the year and shifts the responsibility to the
employers.
Every individual who receives income is granted a tax credit or
a tax relief from the Authority, this is known as Personal Relief.
Insurance relief and mortgage relief are also available for eligible
persons. The total tax credit is spread evenly during the charge
year. At the end of the year, an individual will submit his self-assessment
on total income received from various sources. Should the tax credit
be lower than actual tax charged during the year, the balance of
tax due will be payable.
Corporation tax is a form of income tax that is levied on companies.
Resident companies are taxable at a rate of 30% w.e.f year of income
2000 while non - resident companies are taxable at a rate of 37.5%.w.e.f
year of income 2000.
Withholding taxes are deducted at source from the following sources
of income: Interest, dividends, royalties, management or professional
fees, commissions, pension or retirement annuity, rent, appearance
or performance fees for entertaining, sporting or diverting an audience.
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i) |
Divided
Income: |
10% |
10% |
10% |
10% |
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ii) |
Qualify
Divided which is also the final tax |
5% |
5% |
5% |
5% |
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iii) |
Interest, discount, or original issue discount arising from: |
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Bearer
instruments |
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(W.e.f
11th June, 1998) |
25% |
25% |
25% |
25% |
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Government
Bearer Bond |
15% |
15% |
15% |
15% |
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Qualifying
interest arising from: - |
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Housing
bonds: |
10% |
10% |
10% |
10% |
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Bearer
Instruments (w.e.f 1st July, 1996) |
20% |
20% |
20% |
20% |
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In
any other case (w.e.f 1st July 1996) |
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15% |
15% |
15% |
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v) |
Commission
payable by Insurance Companies to: |
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Insurance
Brokers |
5% |
5% |
5% |
5% |
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Insurance
Agents |
10% |
10% |
10% |
10% |
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Presumptive
Income Tax in respect of gross proceeds from certain specified
Agricultural produce. W.e.f 1.1.2000 – 15.6.2000 |
2% |
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vii) |
Royalties |
5% |
5% |
5% |
5% |
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viii) |
Consultancy,
Agency fees |
2% |
2% |
10% |
5% |
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Contractual
fee |
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5% |
3% |
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i) |
Management
and Professional Fees |
20% |
20% |
20% |
20%
except commission to overseas agents for flower exports |
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ii) |
Royalties
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20% |
20% |
20% |
20% |
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iii) |
Rent,
premium or similar considerations for the use or occupation: |
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Of
immovable property: |
30% |
30% |
30% |
30% |
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Of
movable property |
15% |
15% |
15% |
15%
except aircraft leasing |
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iv) |
Dividend
Income: |
10% |
10% |
10% |
10% |
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v) |
Interest
other than ix) below: |
121/2% |
121/2% |
15% |
15% |
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vi) |
Pension
or Retirement annuity |
5% |
5% |
5% |
5% |
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viii) |
An
appearance or performance for purposes of diverting an audience |
20% |
20% |
20% |
20% |
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ix) |
Supporting,
assisting or arranging an appearance |
20% |
20% |
20% |
20% |
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x) |
Management
and Professional fee(see Para 5(2)(g) 9th schedule) |
121/2% |
121/2% |
121/2% |
121/2% |
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xi) |
Interest
(see Para 5 (2)(h) 9th schedule): |
10% |
10% |
10% |
10% |
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xii) |
Interest
on bearer instruments |
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20% |
20% |
20% |
Advance tax is applicable to Matatus and other Public Service Vehicles.
It is not a final tax, but a tax partly paid in advance before a
public service vehicle or a commercial vehicle is registered or
licensed.
The current rates are:
- For vans, pickups, trucks and lorries Kshs.1, 500 per ton of
load capacity per year or Kshs.2, 400 whichever is higher.
- For saloons, station wagons, mini-buses, buses and coaches,
Kshs.60 per passenger capacity per month or Kshs.2, 400 whichever
is higher
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