A

KRA Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

 

A

Agency fees

Payments made to a person/agent for acting on their behalf of another person.


Annuity Contract

A contract providing for the payment of an individual of a life annuity.


Annuity

An insurance product offered to people. An individual is paid a fixed sum of money each year, typically for the rest of their life. It can be used as a retirement strategy to get steady streams of money.


Assessment

It is an exercise we conduct to obtain the value of your property, assets usually for purposes of calculating tax due.


Appealable decision

This means an objection decision and any other decision made under a tax law.


Authorised officer

This is an officer appointed by the Commissioner under the Kenya Revenue Authority Act.


Approved place of loading/unloading

This means any quay, jetty, wharf, or other place, including any part of a Customs airport, appointed by the Commissioner by notice in the Gazette to be a place where goods may be loaded or unloaded.


Ad valorem tax

A tax on goods or property expressed as a percentage of the sales price or assessed value.


Allowance

An amount of money paid to persons to meet their expenses. It also refers to deductions made when computing income taxes to attain the taxable income


Avoidance

It is a legal methodology used to lower the amount of tax liability


Arm's length transaction

A transaction among parties, each of whom acts in his or her own best interest.


Audit

An examination of a tax return by tax authorities at the taxpayer's place of business.


 

B

Balance of Tax

It refers to the remainder of tax to be paid when paying instalment tax. The balance of the tax is payable by the last day of the 4th month after the end of the year of income.


Boarding station

This means any place appointed by the Commissioner by notice in the Gazette to be a place for aircraft or vessels arriving at or departing from any port or place to bring to for the boarding by or the disembarkation of officers.


Balance sheet

Statement of the financial position of a business as of a particular date. The statement will show the business's assets in one column and its liabilities and owner's equity in another column.


 

C

Casual employment

Any engagement with any one employer which is made for a period of less than one month, the emoluments of which  are calculated by reference to the period of the engagement or shorter intervals.


Current year of income

Refers to income charged to instalment tax. Means the year of income for which the instalment tax is payable.


Cargo

This includes all goods imported or exported in any aircraft, vehicle or vessel other than such goods as are required as stores for consumption or use by or for the aircraft, vehicle or vessel, its crew and passengers, and the bona fide personal baggage of such crew and passengers.


COMESA

This means the organisation established by the Treaty establishing The Common Market for Eastern and Southern Africa, 1994.


Countervailing duty

This means a specific duty levied for the purposes of offsetting a subsidy bestowed directly or indirectly upon the manufacture, production or export of that product.


Countervailing measure

This means actions taken to counter the effect of subsidies.


Customs area

This means any place appointed by the Commissioner by notice in writing under his or her hand for the deposit of goods subject to Customs control.


Customs revenue

This means any amounts collectable by the Customs in accordance with the provisions of the Customs laws.


Customs warehouse

This means any place approved by the Commissioner for the deposit of unentered, unexamined, abandoned, detained, or seized, goods for the security thereof or of the duties due thereon.


Company

A legal entity (a corporation) organized to perform an activity, business or industrial enterprise.


 

D

Double Taxation Agreements

(DTA) are international agreements concluded between two jurisdictions to allocate taxing rights between two countries.


Double Taxation

They are agreements between Kenya and other countries that lessens the tax burden on citizens and corporation of each country.


Document Processing Centre

(DPC): was established to replace the traditional Long Rooms countrywide. It is a One Stop Centre for online document processing and validation.


Dividends

A payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders.


Debenture

It includes debenture stock, a mortgage, mortgage stock or any similar instruments acknowledging indebtedness, secured on the assets of the person issuing the debenture.


Discount

This means interest measured by the difference between the amount received on the sale, final satisfaction or redemption of any debt bond, loan, claim, obligation or evidence of indebtedness and the price paid on  purchase  or  original  issuance  of  the  bond  or  evidence  of  indebtedness  or the  sum  originally  loaned  upon  the  creation  of  the  loan,  claim.


Dividend

This means any distribution (whether in cash or property, and whether   made   before   or   during   a   winding   up) by a  company   to   its shareholders  with  respect  to  their  equity  interest  in  the  company,  other  than distributions  made  in  complete  liquidation  of  the  company  of  capital  which was originally paid directly into the company in connection with the issuance of equity interests


Due date

This means the date on or before which tax is due and payable.


Duty drawback co-efficient

means the amount of duty refundable per unit of goods exported.


Duty drawback

This means a refund of all or part of any import duty paid in respect of goods exported or used in a manner or for a purpose prescribed as a condition for granting duty drawback.


Dutiable goods

This means any goods chargeable with duty.


Duty

This includes any cess, levy, imposition, tax, or surtax, imposed by any Act


Demurrage

It refers to a fee charged for the amount of days that an import container is under the control of the shipping, carrier, port, or Railroad Company for the storage of containers or rail cars that exceed free time offered.


Deductions

An item which is subtracted (deducted) in arriving at, and which therefore reduces, taxable income.


Deferment of tax

The postponement of tax payments from the current year to a later year.


Deferred income

Term used to describe income which will be realized at a future date, thus delaying any tax liability.


Dividends

A payment by a corporation to shareholders, which is taxable income of shareholders. Most corporations receive no deduction for it.


Duty

Customs duties levied on imported products.


Duty-free zone

A designated area at an international airport or port where imported goods may be unloaded, stored and reshipped without payment of customs duties or other types of indirect taxes, provided the goods are not imported.


 

E

Employer

Includes any resident person responsible for the payment of, or on account of, emoluments to an employee, and an agent, manager or other representative so responsible in Kenya on behalf of a non-resident employer.


Employer

Includes any resident person responsible for the payment of, or on account of, emoluments to an employee,  and an agent, manager or other  representative  so  responsible  in  Kenya  on  behalf  of  a  non-resident employer.


Export processing zone

This means a designated part of Customs territory where any goods introduced are generally regarded, in so far as import duties and taxes are concerned, as being outside Customs territory but are restricted by controlled access.


Employment income

Income source of individuals, covering income derived from labour or other current or former dependent personal services such as salaries, wages, bonuses, allowances, and compensation for loss of office or employment, pensions and, in some countries, certain social security benefits.


Estate

Broadly, all that a person owns, whether real property or personal property, for instance, the estate one leaves at death.


Exemptions

Tax laws frequently provide specific exemptions for persons, items or transactions, etc. which would otherwise be taxed. Exemptions may be given for social, economic or other reasons.


 

F

Final Tax

Under tax treaties the withholding tax charged by the country of source may be limited to a rate lower than the rate which would be charged in other circumstances - this reduced rate is then the final tax in the country of source.


Foreign Tax

In relation to income charged to tax in Kenya, means income tax  or  tax  of  a  similar  nature  charged  under  any  law  in  force  in  any place with the government of which a special arrangement has been made by the Government of Kenya and which is the subject of that arrangement.


Franking

This is the process used to affix any type of mark or stamp to a paper to indicate that the stamp duty has been paid.


Foreign port

This means any port in a foreign country


 

G

Gross income

It refers to the amount of money a person earns in one year derived from a trade, business or services, including interest, dividends, royalties, rentals, fees or otherwise before taxes.


Government warehouse

This means any place provided by the Government of a Partner State, and approved by the Commissioner, for the deposit of dutiable goods on which duty has not been paid and which have been entered to be warehoused.


Green Channel

This means that part of the exit from any customs arrival area where passengers arrive with goods in quantities or values not exceeding those admissible.


 

I

Invoice

A statement that summarizes the total amount for services rendered or list of goods supplied.


Interest

A fee that is charged by a lender to a borrower for the right to use the borrowed funds. The funds can be used to purchase a house, a car, or goods that were charged on a credit card, for example. The interest charge typically is expressed as an annual percentage rate.


Incapacitated person

To be in a state of unsoundness of mind.


Individual retirement fund

This means a fund held in trust by a qualified institution for a resident individual for the purpose of receiving and investing funds  in  qualifying  assets  in  order  to  provide  pension  benefits  for  such  an individual  or  the  surviving  dependents  of  such  an  individual  subject  to  the Income Tax (Retirement Benefit) Rules


Internal Container depot

ICD means any place appointed and licensed by the Commissioner for the deposit of goods subject to customs control.


International organisation

This is an organisation with international membership, scope or presence and the membership are sovereign powers or the governments of sovereign powers.


Import duties

This means any customs duties and other charges of equivalent effect levied on imported goods.


 

J

Jurisdiction

The power, right, or authority to interpret and apply tax laws or decisions.


 

L

Losses

The excess of expenses over revenues for a period, or the excess of the cost of assets over the proceeds when the assets are sold or otherwise disposed of, or abandoned or destroyed.


 

M

Management or professional fee

A payment made to a person, for services rendered in managerial, technical, agency or consultancy services.


Manufacturing under bond

This is a facility extended to manufacturers to import plant, machinery, and equipment and raw materials tax free, for exclusive use in the manufacture of goods for export.


 

N

Net income

Net income is gross income less deductible income-related expenses.


 

P

Penalty

A punitive measure that the law imposes on taxpayers who fail to diligently file and pay for their statutory taxes.


Partnership

It is a type of business or organisation whereby two or more people cooperate to manage and operate a business.


Per Diem

Daily allowance, usually for travel, entertainment, employee compensation, or miscellaneous out of pocket expenses incurred while conducting a business transaction.


Profit

The excess of revenue over expenditure


PIN

Personal Identification Number (PIN) is a number which identifies a person for purposes of transacting business with Kenya Revenue Authority, other Government agencies and service providers. It is processed by Domestic Tax Department.


Prescribed Form

A set down legal document that has been set down to be used for a particular action.


Port

This is any place, whether on the coast or elsewhere, appointed by the Council by notice in the Gazette, subject to any limitations specified in such notice, to be a port for the purpose of the Customs laws and, in relation to aircraft, a port means a Customs airport.


Post Office

This is a Partner State Posts body established in accordance with a Partner States' Communication law.


Prohibited goods

This is any goods the importation, exportation, or carriage coastwise, of which are not allowed/ forbidden by law.


 

R

Resident individual

Has a permanent home in Kenya and was present on Kenya for any period in a particular year of income under consideration; or has no permanent home in Kenya but-

  • was present in Kenya for a period or periods amounting to the aggregate to 183 days or more in that year of income; or
  • was present in Kenya in that year of income and in each of the two preceding years of income for periods averaging to more than 122 days in each year of income;

Resident company

That the body is a company incorporated under a law of Kenya; or the management and control of the affairs of the body was exercised in Kenya for any year of income.


Registered individual retirement Fund

An individual  retirement  fund  where  the  trust  deed  for  such  a fund has been registered with the Commissioner.


Re-exports

This are goods, which are imported and are under Customs control for re-exportation.


Red channel

This is that part of the exit from any customs arrival area where passengers arrive with goods in quantities or values exceeding passenger allowance.


Refinery

This is a bonded warehouse licensed by the Commissioner for the treatment of oils.


Registered user

This is a person authorised to access the customs computerised system.


Restricted goods

This is any goods the importation, exportation, transfer, or carriage coastwise, of which is prohibited but can be permitted under certain circumstances and is subject to approval of a competent authority.


 

S

Sole Proprietor

Referring to persons who work for themselves and are not employed by another. The owner-operator of a sole proprietorship or a partner is considered self-employed.


Stamp Duty

Duty levied upon the issue of official documents, stamp duties are "levied" by way of a stamp being fixed to the document.


Smuggling

This is the importation, exportation, or carriage coastwise, or the transfer or removal into or out of a Partner States, of goods with intent to defraud the Customs revenue, or to evade any prohibition of, or restriction.


Subsidy

This is the assistance by a government of a Partner State or a public body to the production, manufacture, or export of specific goods taking the form of either direct payments, such as grants or loans or of measures with equivalent effect such as guarantees, operational or support services or facilities and fiscal incentives.


Sufferance wharf

This is any place, other than an approved place of loading or unloading at which the Commissioner may allow any goods to be loaded or unloaded.


 

T

Tax Return

This is a declaration made by taxpayers that summarizes their income, expenses and other pertinent tax information.


Tax Incentive

A tax incentive is a tax a benefit that reduces tax liability or defer the payment of tax to a future date. These incentives are aimed at encouraging investments in the industry thereby creating employment directly and indirectly.


Tax offences

They include late filing, late payment, and failure to declare taxable income or transactions, and negligent or fraudulent misstatements in tax declarations.


Tax Refund

Also known as tax rebate is a refund on taxes when the tax liability is less than the taxes paid.


Tax Agent

Tax adviser who assists the taxpayer in fulfilling their statutory tax obligation on their behalf.


Tax clearance certificate

It is a document we issue to taxpayers to certify that a taxpayer has fully cleared all their taxes.


Tax Compliance Certificate

It is a certificate we issue to taxpayers to satisfy and confirm that they are compliant with all their statutory taxes as per their obligations.


Transfer Pricing

They are rules and methods for pricing transactions within and between enterprises under common ownership or control. It can be used as a profit allocation method to attribute a multinational corporation's net profit (or loss) before tax to countries where it does business.


Tax Law

Any Regulations or other subsidiary legislation made under this Act or the Income Tax Act, Value Added Tax Act, and Excise Duty Act.


Tax decision

A determination of the amount that a tax representative, appointed person, director or controlling member is liable for.


Tax representative

A person who is the tax representative of the taxpayer.


Taxpayer

A person liable for tax under a tax law whether or not they have accrued any tax liability in a tax period.


Transit

This is the movement of goods imported from a foreign place through the territory of one or more of the Partner States, to a foreign destination.


Tax fraud

It is a form of deliberate evasion of tax which is generally punishable under criminal law. The term includes situations in which deliberately false statements are submitted, fake documents are produced.


 

U

Unpaid Tax

This means any tax that has not been paid by the due date or any late payment interest in respect of a tax liability.


Uncustomed goods

This includes dutiable goods on which the full duties due have not been paid, and any goods, whether dutiable or not, which are imported, exported or transferred or in any way dealt with contrary to the provisions of the Customs laws.


 

V

Vessel

Conveyance by water of human beings or goods.


 

W

Wharf owner

This includes any owner or any occupier of any approved place of loading or unloading or of any sufferance wharf.


Warehouse keeper

This is the holder of a licence granted in respect of a bonded warehouse


 

Z

Zero Rate

It refers to VAT, where goods and services that are taxable but the rate of tax is 0% on their input supplies.


 

Glossary