Understanding Advance Tax: Essential Information for Vehicle Owners.

 

Welcome to the latest edition of the RWK & ASSOCIATES CPA(K) Newsletter. In this issue, we focus on Advance Tax, a critical requirement for all commercial and public service vehicle owners. Understanding how this tax operates and how to manage it effectively can save you time and avoid unnecessary complications.

Advance Tax is a mandatory prepayment needed before a commercial or public service vehicle can be registered or licensed. The tax amount is determined by the vehicle's type and capacity. For example, vans, pick-ups, trucks, and similar vehicles incur a fee of Kshs. 2,500 per ton of load capacity or kshs 5000 whichever is higher. In contrast, saloons, station wagons, mini-buses, buses, and coaches are charged Kshs. 100 per passenger capacity per month or kshs 5000 annual amount whichever is higher.

It is important to note that Advance Tax is not a final tax. Taxpayers must report this payment in their annual income tax returns and settle any additional taxes that may be due. Exemptions are available for public institutions and specific organizations, but they must provide valid documentation to the Commissioner to confirm their exempt status.

How to Pay the Advance Tax.

To facilitate the payment of Advance Tax, log in to the iTax system, navigate to Payments > Payment Registration, and select Income Tax under Tax Head and Advance Tax under Tax Subhead. Payments can be made through a bank e-slip or via MPESA using Paybill number 572572, with the payment registration number as the account number. Ensure payments are completed by January 20th or before transferring vehicle ownership to stay compliant.

Penalties and Interest

Late payment will attract a penalty of 55 of the tax due and a payable and a late payment interest at a rate equal to 1% per month on the amount unpaid from the period the tax becomes due until the tax is fully paid.

Thank you for staying informed with RWK & ASSOCIATES CPA(K). We hope this information helps streamline your vehicle registration process. As always, feel free to reach out with any questions or for further assistance.


Book a Free consultancy with us here

Visit our website to learn more

Follow our pages Facebook , Twitter, Linked In , Instagram , TikTok












Comments

Post a Comment

Popular posts from this blog

Clarification On Taxation Of Meals Provided By Employers

Image
Background:  The Kenya Revenue Authority (KRA) issued a Technical Circular (Ref: 1005/1) in March 2017, outlining guidelines for the taxation of employment income, particularly regarding benefits provided to employees. Among these benefits, the circular stated that meals provided to employees up to a value of Kshs. 48,000 per year per employee were not subject to tax, in accordance with Section 5(4)(f) of the Income Tax Act. Clarification:  Recently, there has been confusion regarding the interpretation and application of this provision. The KRA has clarified that if an employer provides meals exceeding the value of Kshs. 48,000 per annum per employee, the entire value of the meal becomes taxable income for the employee. Essentially, any amount spent on meals beyond the specified limit is now subject to taxation under the Income Tax Act. Implications for Employers: This clarification places the responsibility on employers to ensure compliance with tax regulations regarding employee ben
Read more

Summary Of The Key Proposed Changes In The Finance Bill 2024

Image
  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 car
Read more