RWK Financial Compass

  A significant shift has occurred with the UK temporarily suspending duty on cut flowers for two years, aiming to bolster trade relations with Kenya and other East African nations. This move holds implications not only for the horticulture sector but also for the broader economic ties between these regions. The UK's decision to waive the eight percent duty on cut flowers marks a pivotal moment for growers in Kenya, Ethiopia, Rwanda, Tanzania, and Uganda. With this suspension in place until June 2026, exporters from these regions can now access the UK market with zero tariffs, regardless of transit routes. This not only simplifies trade logistics but also opens up opportunities for increased export volumes. East African flower growers, who often utilize third-country routes or auction houses, stand to benefit significantly from this policy shift. Moreover, the UK's emphasis on fostering mutually beneficial trade underscores the importance of collaborative economic initiatives i...

  Importance of Proper Record Keeping and Tax Compliance In recent developments, the Kenya Revenue Authority (KRA) has intensified its efforts to ensure tax compliance among citizens, particularly in the realm of property transactions. It has come to our attention that individuals who have purchased land and other assets in the past five years without declaring their sources of income are now under scrutiny. This is a crucial reminder of the significance of maintaining proper records and adhering to tax regulations. At RWK & Associates, we understand the importance of transparent financial practices and compliance with tax laws. The recent messages sent out by the taxman serve as a stark reminder that failing to adequately document property transactions can lead to severe consequences. It is imperative for taxpayers to keep thorough records of sales agreements, financial statements during the acquisition of property, and bank statements for the relevant years. Failure to do so ...

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 emp...

In the ever-evolving landscape of taxation, Kenya has embarked on a significant transformation with the introduction of the Electronic Tax Invoice Management System (eTIMs). This groundbreaking system marks a pivotal moment in tax compliance within the country, bringing forth a series of changes that will impact businesses of all sizes. As we delve into the details of this new system, we aim to provide clarity amidst the confusion and outline the implications it carries for businesses across Kenya. Etims implications 1. Enhanced Expense Tracking: Traditionally, businesses relied on the principle of expenses being wholly and exclusively incurred for income generation to determine tax deductibility. With eTIMs, a stringent administrative layer requires expenses to be supported by eTIMs invoices for tax deductibility. Failure to adhere to eTIMs protocols could lead to a 30 percent corporate tax liability. It's imperative for businesses to ensure meticulous adherence to these pro...

As the government intensifies efforts to bolster tax revenue, landlords and property agents face increasing scrutiny to ensure adherence to regulations. The recent crackdown on unregistered agents and non-compliant landlords underscores the significance of understanding and fulfilling tax obligations within the industry. The rental income tax plays a crucial role in funding public services and infrastructure development. However, despite efforts to simplify the tax process and lower rates, compliance remains a challenge. Many landlords continue to evade taxes, depriving the government of vital revenue. The Treasury's commitment to enhancing registration of property agents demonstrates the government's determination to tackle tax evasion effectively. To improve compliance, the Kenya Revenue Authority (KRA) is implementing innovative strategies such as the block management system and leveraging technology to identify tax evaders. By mapping properties and assigning tax office...

  From a bill into a Law 1.Drafting of Bills: The legislative process typically begins with the drafting of a bill. A bill can be proposed by a Member of Parliament (MP), a committee, or the government. 2.First Reading: The bill is introduced in either the National Assembly or the Senate, depending on its nature. This introduction marks the first reading of the bill. 3.Committee Stage: After the first reading, the bill is referred to a relevant committee for detailed scrutiny. The committee may hold public hearings, gather evidence, and propose amendments to the bill. 4.Second Reading: The bill is debated by the Members of Parliament or Senators during the second reading. This stage allows for a general discussion on the principles and merits of the bill. 5.Consideration in Detail: After the second reading, the bill is considered clause by clause. Members have the opportunity to propose amendments, which are debated and voted upon. 6.Third Reading : The bill is debated...

Background The journey of the Housing Levy in Kenya began with its proposal on June 26, 2023, as part of the Finance Bill of 2023, mandating a 3 percent deduction from employees' gross salaries towards the National Housing Development Fund (NHDF). Initially contentious, the levy evolved from a contribution to a mandatory deduction, directing funds towards the Affordable Housing Program. Despite heated debates and objections during the third reading in June-July 2023, the proposal was ultimately passed, with 184 members of the National Assembly in support. Amendments ensued, responding to stakeholder feedback by reducing the rate to 1.5 percent and transferring the levy into a tax collected by the Kenya Revenue Authority (KRA). Finally, in March 2024, President William Ruto signed the Affordable Housing Bill into law, expanding the levy's contributors to include individuals in the informal sector, thus addressing previous constitutional concerns. Current Changes On ...