RWK Financial Compass

  The Kenyan government has recently introduced new levies on imported cereals, a move expected to have significant implications for both importers and consumers. Effective from August 12, 2024, the Agriculture and Food Authority (AFA) imposed a 2% levy on the customs value of all imported cereals and legumes, alongside a 0.3% levy on exports of these products. Initially slated for implementation on July 1, this decision follows Regulation 37 of The Crops (Food Crops) Regulations of 2019, which had been postponed. This newsletter aims to provide our clients with a comprehensive overview of these changes, their expected impact, and potential future developments. Impact on Prices and Trade The introduction of these levies is anticipated to lead to significant cost increases for traders. Estimates indicate that a truckload of maize will incur an additional KSh 20,000, while rice will see a hike of KSh 50,000. These additional costs come on top of existing charges from other governmen...

  Understanding Tax Refunds. A tax refund in Kenya occurs when a taxpayer has paid more tax than their actual tax liability for a given period, typically a year. This overpayment can result from excess withholding tax, miscalculations, or other factors. The KRA processes these refunds and returns the excess amount to the taxpayer. How Tax Refunds Work Tax Filing : Individual Returns : Individuals must file their annual income tax returns by June 30th of the following year. This includes providing details of income, deductions, and other relevant information. Corporate Returns : Companies must file their returns within six months of the end of their financial year. Determining Overpayment : During the tax return process, if the total tax paid (through withholding or estimated payments) exceeds the tax liability calculated, a refund is due. This can result from: Excess PAYE : If an employee has had more ...

  EXPLAINING TAX APPEALS PROCESS. RWK & Associates CPA(K) is pleased to present our latest newsletter, focusing on the essential procedures for tax appeals in Kenya. Understanding these procedures is crucial for taxpayers who wish to contest tax assessments or decisions made by the Kenya Revenue Authority (KRA). This newsletter aims to provide a comprehensive overview of the steps involved, ensuring that our clients are well-informed and prepared to navigate the tax appeal process effectively. TAX APPEAL PROCESS. The first step in the tax appeal process is the Initial Dispute Resolution, which begins with the submission of a Notice of Objection. Taxpayers must file this notice within 30 days of receiving a tax assessment from the KRA. The notice should clearly outline the grounds for contesting the assessment and include any supporting documents.  Following this, the KRA has 60 days to respond to the objection. Depending on their findings, the KRA may either allow the obje...

  The Kenya Revenue Authority (KRA) has proposed significant changes to the method of valuing used motor vehicles for customs purposes, which may have considerable implications for motorists and importers. Proposed Changes KRA plans to shift from the Current Retail Selling Price (CRSP) method to the Transaction Value method for valuing used vehicles. This change is intended to align with a court ruling and directives from the East African Community (EAC) to use Free On Board (FOB) values for vehicle imports. The Transaction Value method considers the actual price paid for the vehicle, which could lead to higher duty charges if the declared transaction value exceeds the previous retail estimates. Impact on Motorists and Importers Increased Costs: The new valuation method is expected to increase the import duties on used cars. For instance, the maximum depreciation rate has been reduced from 70% to 65%, meaning that the taxable value of vehicles will be higher, resulting in increased...

We hope this message finds you well. In light of recent developments concerning the Finance Act, 2023 in Kenya, we want to provide an update on the potential implications for taxpayers. As you may be aware, the High Court has temporarily halted the implementation of this Act, and we want to help you understand the key consequences of this withdrawal and how it might affect your business and tax planning strategies. Potential Reversion of 2023 Tax Changes Due to Nullification of the Finance Act 2023 Digital Asset Tax : The newly implemented tax on income from the transfer or exchange of digital assets, including cryptocurrencies, might be revoked. This could mean that income from such transactions would no longer be taxable as per the prior law. Pay As You Earn (PAYE) Tax Rates : The introduced tax bands, which increased rates to 32.5% for income between KES 500,000 and KES 800,000, and 35% for income exceeding KES 800,000, could revert to the previous lower rates if the Finance Act 20...

   Unconstitutionality of the Finance Act 2023 The Finance Act 2023 in Kenya has been declared unconstitutional by the Court of Appeal. This ruling, issued on July 31, 2024, found that the Act was fundamentally flawed due to significant violations of constitutional provisions, particularly concerning public participation in the legislative process. The court determined that the Act contravened Articles 220(1)(a) and 221 of the Kenyan Constitution and sections of the Public Finance Management Act (PFMA), which govern the budget-making process. As a result, the Act is considered void ab initio, meaning it was invalid from the outset. Reasons: The Court of Appeal's decision highlighted several key reasons for the unconstitutionality of the Finance Act 2023: Lack of Public Participation: The Act was enacted without adequate public participation, failing to meet the constitutional requirement for engaging the public in legislative processes. Violation ...