RWK Financial Compass

The crucial first step of any tax dispute with the Kenya Revenue Authority (KRA) is the notice of assessment. This phase is pivotal for taxpayers, as it sets the stage for all subsequent interactions with the KRA. However, it is also fraught with potential pitfalls that can quickly escalate into significant liabilities if not handled meticulously.  The Critical Role of the Notice of Assessment A notice of assessment is the official document issued by the KRA detailing the tax amount a taxpayer is deemed to owe. This notice marks the formal commencement of a tax dispute under the Tax Procedures Act 2015. Receiving a notice of assessment should prompt immediate action.  Importance of Diligent Response Responding diligently to a notice of assessment cannot be overstated. This response phase is not merely procedural; it is a strategic defense against potential tax liabilities. An objection must be lodged within 30 days of the notice, clearly stating the grounds of objection, the s...

  Navigating the Affordable Housing Levy 2024   The Affordable Housing Act (AHA) 2024, effective from March 2024, introduces the Affordable Housing Levy (AHL), aimed at funding affordable housing initiatives across the nation. This levy applies to individuals and non-individuals at a rate of 1.5% on either gross salary or gross income received or accrued. At RWK & Associates, we are committed to helping you understand and comply with this new legislation. This newsletter outlines key provisions of the AHA 2024 and provides a stepby-step guide to managing your AHL obligations efficiently. Understanding the Affordable Housing Levy The AHL mandates a 1.5% levy on gross salary or gross income. Notably, employers who are already deducting and paying AHL from their employees' salaries are exempt from paying the levy on their gross income. This provision ensures that there is no double taxation, simplifying compliance for employers. The levy is due by the 9th working day af...

  Income Tax Act: • Introduction of Motor Vehicle Tax at 2.5% of the vehicle value payable upon insurance issuance. • Withholding tax on goods supplied to public entities at 3% for residents, 5% for non-residents. • Taxation of income from digital marketplaces/platforms at 20% for non-residents, 5% for residents. • Introduction of Significant Economic Presence Tax at 30% for non-residents. • Minimum top-up tax for resident entities in multinational groups. • Deductibility of SHIF, post-retirement medical funds, and the affordable housing contributions. • Investment deduction for spectrum license purchase at 10%. • An eco levy for manufacturers and importers will be introduced. • Imported motorcycles beyond a certain price will be taxed at 10% of value instead of a flat rate. • Taxation of interest income from infrastructure bonds for residents. Value-Added Tax Act: • VAT exemptions on bread will be removed. • Removal of VAT exemptions for financial services such as credit and debit...

In recent weeks, the business landscape in Kenya has been abuzz with discussions surrounding the implementation of the Affordable Housing Levy (AHL). The clarification by the Kenya Revenue Authority (KRA) regarding the levy's application has brought to light significant implications for small businesses and landlords across the country. Understanding the Levy's Scope The AHL, initially targeted at salaried employees, has now extended its reach to include small businesses and landlords. According to the latest advisory from the KRA, landlords will be required to pay 1.5 percent of the rent received, while small businesses with annual sales between Sh1 million and Sh25 million will also be subject to the levy based on their gross sales, not operating profits. This expansion of the levy's scope has raised concerns about its potential impact on the affordability of housing and the overall cost of living. Implications for Micro Enterprises and Landlords Micro enterprises s...

Welcome to this week's edition of the RWK & Associates tax newsletter. Today, we delve into the intricacies of Turnover Tax (TOT), a fiscal measure aimed at streamlining taxation for businesses within a certain turnover bracket. TOT, governed by Section 12 (C) of the Income Tax Act (CAP 470), has garnered attention for its simplicity and impact on small to medium-sized enterprises (SMEs). Let's explore its key features, implications, and benefits Understanding Turnover Tax (TOT) TOT is a tax designed for businesses with a gross turnover ranging from Kshs. 1,000,000 to Kshs. 25,000,000 during any fiscal year. Implemented at a rate of 3% on gross sales since July 1st, 2023, TOT aims to simplify taxation processes for eligible entities. Notably, TOT operates as a final tax, meaning no further income tax filings are required on the income subject to it. This aspect alone has made it an attractive option for businesses seeking to reduce administrative burdens.  Eligibility and E...