Kenya: 2009 Ernst and Young Budget Review

Tuesday, 16 June 2009

Page 3 of 7   PERSONAL TAXES Physically Challenged Persons Minimum taxable income for the physically challenged persons introduced and pegged at Kshs 2009 Budget Review ª Eastern Africa 150,000 per month. Expenditure on healthcare services and facilities for physically challenged allowable deduction up to KES50,000 per month. Previously, no tax incentive was provided to the physically challenged persons. Effective date: The Minister for Finance to prescribe the procedure for application for and grant of exemption by gazette notice. Monthly Pension Income The first KES25,000 of monthly pension income exempt from tax. Previously the first KES15,000 of monthly pension income was exempt from tax. Reduce tax burden on senior citizens of our nation. Effective date: 1 January 2010 Lump Sum Withdrawals From Retirement Benefit Schemes The first KES600,000, up from KES480,000 withdrawal from a registered pension or individual retirement fund exempted from tax. Default Risk Commissioner is empowered to demand tax payable regardless of the due date where he has reason to believe that the taxpayer is likely to default due to imminent departure from Kenya ; or for any other sufficient cause. An additional clause to safe guard loss of revenue through tax evasion by people leaving the country permanently. To curb tax evasion by those relocating to other countries. Effective date: 12 June 2009 Value Added Tax Inventory Claim Period of lodging VAT claim on inventory following VAT registration has been extended to 6 months. Previously such claims used to be lodged within a period of 30 days. This is a big relief to the business community.   Withholding VAT Withholding VAT agents are under obligation to issue withholding VAT Certificate at the point of payment. Previously, the agent was obligated to furnish the supplier with “an acknowledgement of the payment”. To fasten the process of claiming of VAT withheld. Exempt Goods Exempt goods widened to include telephones for cellular or other wireless network. Cellular and other wireless telephones have been subject to VAT. Increase in costs of mobile and wireless telephone gadgets as the dealers cannot off set VAT incurred on their operations.   Exempt Services Exemption of sale of building clarified. Previously, VAT exemption on sale of buildings was not clear. Details of exempt financial services provided. Exempt financial services only excluded financial and management advisory services; safe custody; executorship and trusteeship services. This is a clarification to avoid future litigation. Zero Rated Goods Film equipments, digital videos & cameras, generators, electricity generating equipments, parts of agricultural tractors and bicycles have been zero rated. Zero rated services List widened to include the following: The supply of taxable goods and services to exporters who are gazetted by the Commissioner. Documents to support these include copy of invoice, proof of payment, certificate from purchaser and evidence of exporter's registration. Supply of taxable supplies in respect of tea bought from the auction centres provided the tea is for export. Supply of taxable goods or services for use in construction of grain silos; Kenya Red Cross Society; and film producers. This will attract investors in the film industry and assist in managing exporters cash flow as the amount of VAT refunds will significantly decline. VAT Remission The application of remissions' bracket has been widened to include all household utensils, food stuffs, materials for provision of shelter or equipment and materials for health, sanitary or educational purposes. It also specifies the period within which purchase should be done after any natural disaster. Previously, it allowed a few food stuffs, clothing and footwear. No limit of the timing of supply after a natural calamity. Enhances clarity, widens and encourages humanitarian assistance from nongovernmental organization and relief agencies. Tax Invoice Tax invoice for credit sales should be issued at the time of supply. Credit sales invoice were to be issued at the time of supply or within 14 days. Advantageous to the purchasers since the input tax can be claimed immediately on receipt of the tax invoice. Transit Goods Defined to mean goods imported from foreign place, through the territory of Kenya , to a foreign destination. There was no definition in the Act. Removes misinterpretation of the term goods-in-transit Determination of Taxable Value for imported goods Taxable rate clarified to include the customs duty paid. The amount included customs duty payable, whether or not a remission had been issued. Removes any possible ambiguity. Services Supplied in Kenya Services used or consumed in Kenya regardless of location of the payer, among other specifications would be deemed to be provided in Kenya . Services supplied in Kenya re-defined to mean, other specifications remaining constant, services physically used or consumed in Kenya regardless of the location of the payer. Previously, the definition stated as “...services physically performed in Kenya ...” An attempt towards definition of services provided in Kenya . << Start < Prev 1 2 3 4 5 6 7 Next > End >>