conversations
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[
{
"from": "human",
"value": "What should a person living with disability indicate as the Certificate Date when filing the IT1 Return?"
},
{
"from": "gpt",
"value": "The date to indicate is dependent on various scenarios.\nIf the exemption certificate was renewed before the period you are filing the IT1 return, use the exemption certificate dates as from 01/01/year to 31/12/year.\nIf the exemption certificate was renewed within the tax period of filing the return the IT1 return can be filed by declaring both the expired one and the renewed exemption certificate."
}
] |
[
{
"from": "human",
"value": "What happens to Previous Returns filed by person living with disability whereby the return could not accept Two, 2 Exemption Certificates?"
},
{
"from": "gpt",
"value": "Prior cases can now be amended on iTax to ensure that relief amounts are gotten for a full period as per the Income Tax Act."
}
] |
[
{
"from": "human",
"value": "What happens to Previous Returns filed by person living with disability whereby the return could not accept Two, 2 Exemption Certificates?"
},
{
"from": "gpt",
"value": "Prior cases can now be amended on iTax to ensure that relief amounts are gotten for a full period as per the Income Tax Act."
}
] |
[
{
"from": "human",
"value": "How do the new tax rates apply when filing PAYE returns?"
},
{
"from": "gpt",
"value": "Depending on the period declared in the basic information the return will apply the relevant rates and reliefs applicable for that period e.g. if you select return period as 01/01/2017 to 31/12/2017 then the return will use the new rates and reliefs as per the Finance Act 2016."
}
] |
[
{
"from": "human",
"value": "Can I correct an error once I file a return, amendments?"
},
{
"from": "gpt",
"value": "Yes. You can do this by filing an amended return."
}
] |
[
{
"from": "human",
"value": "How does one enable MACROS on the Excel Return?"
},
{
"from": "gpt",
"value": "MACROS are inbuilt formulae in Excel that should be enabled once you download the return so that you can be able to fill in the details of the return. Enable MACROS under File - Options- Trust Center- Trust Center Settings- Macro Settings- Check to enable all macros- Check trust access to the VBA project model."
}
] |
[
{
"from": "human",
"value": "Can I view a copy of the previous returns that I have filed?"
},
{
"from": "gpt",
"value": "Yes. Log on to your account, select returns then consult return. You need to indicate the type of return and the period."
}
] |
[
{
"from": "human",
"value": "What Corporation Tax incentives do newly listed companies enjoy?"
},
{
"from": "gpt",
"value": "Currently the Income Tax Act does not offer a preferential tax regime for newly listed companies. These provisions were deleted effective 25th April, 2020 by The Tax Laws (Amendment) Act, 2020."
}
] |
[
{
"from": "human",
"value": "Are EPZ exempt from Corporation Tax?"
},
{
"from": "gpt",
"value": "Yes.\nAn Export Processing Zone (EPZ) enterprise which does not engage in any commercial activities is exempted from paying any corporation tax for a period of 10 years starting with the year in which production, sales or receipts relating to the activities for which that enterprise has been licensed as an EPZ enterprise commence.\n After the 10th year, the corporation rate of tax will be 25% for the period of 10 years commencing immediately thereafter.\n“Commercial activities” referred to above, include trading in, breaking bulk, grading, repacking, or relabelling of goods and industrial raw materials\nThough exempt from corporation tax, there following are tax obligations that the EPZ enterprise would be liable for during the period in which it is exempt from corporation tax:\n\ti. The enterprise shall be deemed to be a non-resident subject to a non-resident rate of withholding tax on payments made to the enterprise. Where such payments are made by a person who is not an EPZ enterprise, the tax shall be final tax; and\n\tii. Payments by an export processing zone enterprise to any person other than a resident person shall be deemed to be exempted from tax.\n\tiii. The employees and directors, other than non-residents, of an export processing zone enterprise shall be liable to tax on their employment income and the EPZ enterprise employing them will be required to deduct and remit tax from their employment income.\nIt is important to note that for the period an EPZ enterprise is exempt, it will still be required to submit an annual return of income.\nIn the event of failure to submit a return or late submission of a return, the enterprise will be liable to a penalty of two thousand shillings per day for as long as the return remains unfiled. This penalty shall for purposes of provisions relating to the deduction and recovery of the tax be deemed to be tax."
}
] |
[
{
"from": "human",
"value": "Do Partnerships pay Corporation Tax?"
},
{
"from": "gpt",
"value": "No.\nPartnerships do not pay corporation tax. Partnership income is declared through the partnership return.\nThe table income is distributed to the individual partners as per the agreed profit sharing ratios.\nThe share of profit then forms part of each individual's partner’s income. It will be added to any other income and the total income taxed accordingly."
}
] |
[
{
"from": "human",
"value": "Do self-employed people pay Corporation Tax?"
},
{
"from": "gpt",
"value": "No.\nSelf-employed people and Sole proprietorships are not subject to corporation tax.\nThey are required to declare their total income of the year in the Individual Income Tax Return and pay Income Tax."
}
] |
[
{
"from": "human",
"value": "Can I claim my company expenses?"
},
{
"from": "gpt",
"value": "When filing your Corporation Tax Return (also referred to as Income Tax - Company Return) you are only allowed to claim expenses that have been wholly and exclusively incurred in the production of your income as guided in section 15 and 16 of the Income Tax Act, Cap. 470."
}
] |
[
{
"from": "human",
"value": "What if I had incurred losses?"
},
{
"from": "gpt",
"value": "A company is allowed to carry forward its losses that will be offset against future taxable income.\nHowever, losses cannot be transferred to a different entity.\nCompanies in the extractive industry e.g. mining, oil and gas industries, are only allowed to carry their losses forward for a period of three years, from the year of income in which the loss arose."
}
] |
[
{
"from": "human",
"value": "What if I had incurred losses?"
},
{
"from": "gpt",
"value": "A company is allowed to carry forward its losses that will be offset against future taxable income.\nHowever, losses cannot be transferred to a different entity.\nCompanies in the extractive industry e.g. mining, oil and gas industries, are only allowed to carry their losses forward for a period of three years, from the year of income in which the loss arose."
}
] |
[
{
"from": "human",
"value": "Do I need to have an auditor?"
},
{
"from": "gpt",
"value": "Yes.\nYou should ensure that you get a certified auditor, to verify the records used to prepare your financial statements."
}
] |
[
{
"from": "human",
"value": "How to account for investment deductions."
},
{
"from": "gpt",
"value": "*Buildings (Including Hotels)*\n- Building plans and architect's certificates.\n- Bills of quantities\n- Local authority occupation certificates.\n- Factory layout sketches showing the location of machinery.\n- Other supporting documents to support the expenditure incurred e.g. suppliers' invoices, contract documents, certificates of occupation etc.\n*Plant and Machinery*\n- Suppliers invoices and vouchers.\n- Customs documents where machinery is imported.\n- Clearing and forwarding documents.\n- Documents to support foreign currency transactions.\n- Documents to support cost of installation of machinery.\n*NOTE:* To make it easier for us to examine the documents, prepare a breakdown of the costs and the relevant supporting documents."
}
] |
[
{
"from": "human",
"value": "How to account for dividends and bonuses paid by a cooperative society as allowable deductions."
},
{
"from": "gpt",
"value": "Dividends and bonuses are treated as allowable deductions, against total taxable income.\n- A Society designated co-operative society, other than a designated primary society can pay 100% of total income as dividends to and bonuses to its members.\n- The dividiends are subject to Withholding Tax at the rate of 15%, treated as Qualifying Dividends while bonuses would be subject to PAYE.\n- If a Society dividends and bonuses do not comprise 100% of total taxable income, then the remaining amount is subjected to 30% corporate tax\n- The dividends and bonuses payable cannot exceed 80% 100% of the society’s total income.\n_designated co-operative society_ means a co-operative society registered under the Co-operative Societies Act;\n_primary society_ means a co-operative society registered under the Co-operatives Societies Act whose membership of which is restricted to individual persons.\nDeducting dividends and bonuses from adjusted income only happens if;\n- Payment is made in cash or by cheque to the members.\n- Payment is approved at the AGM by the members of the primary co-op society.\n- Payment is approved by the commissioner of co-op societies."
}
] |
[
{
"from": "human",
"value": "What are the prevailing income tax rates?"
},
{
"from": "gpt",
"value": "- On the first Kshs 24,000 per month or Kshs 288,000 per annum\n- On the next Kshs 8,333 per month or Kshs 100,000 per annum\n- On all income amounts in excess of Kshs 32,333 or Kshs 388,000 per annum\nThe applicable monthly personal relief is Kshs. 2,400 per month or Kshs 28,800 per annum."
}
] |
[
{
"from": "human",
"value": "Does PAYE include earnings from casual employment?"
},
{
"from": "gpt",
"value": "No.\n'Casual employment' in this case refers to employment that is under one month.\nRegular part-time employees and regular casual employment, where the employees are employed casually but regularly, are not considered to be casual employees."
}
] |
[
{
"from": "human",
"value": "Are employee benefits taxable?"
},
{
"from": "gpt",
"value": "Yes.\nWhere an employee enjoys a benefit, advantage or facility of whatsoever nature in connection with employment or services rendered; the value of such benefit should be included in the employee's earnings and charged to tax."
}
] |
[
{
"from": "human",
"value": "Tell me about taxation of loans to employees"
},
{
"from": "gpt",
"value": "Sometimes employers provide loans to their employees and charge an interest lower than the prescribed rate. This becomes a benefit to the employee, for which the employer needs to file and pay Fringe Benefit Tax.\nThe difference between the prescribed rate and the employer's loan rate is chargeable to tax, on the employee. The taxable value of fringe benefit tax is the difference between the market interest rate and the actual interest paid on the loan.\nExample:\nKen gets a loan of Kshs. 3,000,000\nLoan amount: Kshs.3,000,000\nInterest charged: 3%\nMarket Interest rate for the month: 9%\nFringe Benefit is (9% - 3% = 6%) = Kshs.3,000,000 x 6% =180,000 p.a\ni.e. Kshs. 15,000 per month.\nFringe Benefit tax payable by employer is Kshs. 15,000 x 30% = Kshs. 4,500/- for the month"
}
] |
[
{
"from": "human",
"value": "How are loans to employees taxed?"
},
{
"from": "gpt",
"value": "This is a tax on loans to employees.\nWhen an employer provides a loan to an employee and charges interest below the prescribed rate of interest, then the difference between the prescribed rate and the employer's loan rate is a benefit from employment, that the employee should pay tax for.\nThis is type of tax is called Fringe Benefit Tax"
}
] |
[
{
"from": "human",
"value": "What is Withholding Income Tax?"
},
{
"from": "gpt",
"value": "Withholding Income Tax is tax withheld at source. A person making certain payments deducts tax, at the applicable rate, and remits the tax to the Commissioner on behalf of the recipient. Examples of payments subject to withholding tax include, among others: \n\ta. Management, professional or training fees\n\tb.Consultancy fees, Legal fees, Audit fees\n\tc. Contractual fees\n\td. Winnings\n\te. Appearance at or performance to entertain\n\tf. Royalties\n\tg. Interest and deemed interest\n\th. Dividends"
}
] |
[
{
"from": "human",
"value": "How does withholding tax work?"
},
{
"from": "gpt",
"value": "The person making the payment deducts tax prior to paying the amount due. The tax withheld/deducted is then remitted to the KRA. The payer is required to generate a withholding tax certificate on iTax which is automatically sent to the payee once the payer remits the withholding tax to KRA. Withholding tax deducted should be remitted to KRA by the 20th day of the month following the month in which the tax was deducted.\nWithholding tax is claimable by the payee when filing their annual tax returns and is not an additional tax"
}
] |
[
{
"from": "human",
"value": "What is the penalty for failure to deduct withholding tax?"
},
{
"from": "gpt",
"value": "Where a payer fails to withhold tax, the tax shall be deemed to be due and payable by him as though he was the person who earned the income and the due date for the payment shall be the date on which the amount of tax should have been remitted to KRA.\nA late payment penalty of 5% shall also apply on the tax due together with a late payment interest of 1% per month for the period that the tax remains unpaid."
}
] |
[
{
"from": "human",
"value": "Is withholding tax a final tax?"
},
{
"from": "gpt",
"value": "There are a few instances where withholding tax is a final tax.\nWithholding tax is final when deducted in relation to a payment made to a non-resident person with no permanent establishment in Kenya\nWith regard to payments to resident persons, withholding tax is a final tax when it relates to winnings, qualifying interest, qualifying dividend and pensions.\nIn every other case, withholding tax is not a final tax. The taxpayer (payee) is required to declare their income(s) and the withholding tax details when filing their annual tax returns and to pay any balance of tax due."
}
] |
[
{
"from": "human",
"value": "Can an employer choose to either pay their staff using the withholding tax or PAYE regime?"
},
{
"from": "gpt",
"value": "Employees are subject to PAYE taxes. The rates applicable are the individual tax (graduated scale) rates and the employer may take into account allowable deductions (such as mortgage interest) and reliefs (such as personal relief and insurance relief) when computing the PAYE."
}
] |
[
{
"from": "human",
"value": "What are the withholding tax rates?"
},
{
"from": "gpt",
"value": "Huge table"
}
] |
[
{
"from": "human",
"value": "What does a taxpayer require to apply for addition of VAT obligation?"
},
{
"from": "gpt",
"value": "KRA has restricted the addition of VAT obligation and set the following conditions and mandatory documentary requirements for approval of the same;\n1. Original CR12 for companies and Identity documents for directors or individuals including National Identity cards, passports or Alien Identity Cards;\n2. Business permit from relevant bodies;\n3. Work permits for aliens;\n4. Tax Compliance Certificates for all directors;\n5. Letter of appointment of Tax Representative for non-resident companies and identity documents of directors for companies with non-resident directors;\n6. Contact details including physical address, verified telephone contacts, email addresses, utility meter numbers and documents, office rent agreements;\n7. The website(s) or uniform resource locators (URLs) of the supplier through which business is conducted, where applicable;\n8. Contract agreements and/or sample invoices;\n A Taxpayer who meets the above requirements can proceed to make an application for addition of VAT obligation."
}
] |
[
{
"from": "human",
"value": "What is VAT Special Table?"
},
{
"from": "gpt",
"value": "It is a mechanism implemented in iTax to enhance VAT compliance where certain categories of VAT registered taxpayers are restricted from performing certain processes. The following are categories so far on boarded on the special table:\nNil filers and Non-filers – This refers to Taxpayers who have either not filed returns or have consecutively filed NIL returns for a specified period.\n Missing Traders – This refers to taxpayers who are filing and paying VAT but on investigation were found to be involved in VAT fraud relating to ‘missing trader’ schemes "
}
] |
[
{
"from": "human",
"value": "As an individual/organization should I pay VAT and income tax as well?"
},
{
"from": "gpt",
"value": "Income tax is a compulsory tax obligation whereas, for VAT, you pay for it when you are registered with VAT."
}
] |
[
{
"from": "human",
"value": "What are the benefits of the VAT Special Table?"
},
{
"from": "gpt",
"value": "The VAT special table bears the following benefits for traders:\n1. Identify erroneously added VAT obligations or VAT obligations that are no longer required.\n2. Reduces cases of abuse of traders PIN by fraudulent persons\n3. Assist traders to conduct business with compliant suppliers"
}
] |
[
{
"from": "human",
"value": "What happens when a Taxpayer is on-boarded on the VAT Special Table?"
},
{
"from": "gpt",
"value": "1. The taxpayer on-boarded on the VAT Special Table will be restricted from filling VAT returns. Upon attempting to file the return, the system will display the message: “This PIN is currently under review for VAT compliance irregularities. Please contact nearest KRA office.”\nNote : Penalties will not be charged for non-filling of VAT returns as a result of on boarding of a taxpayer on the VAT special table.\n2. Traders cannot claim input tax from taxpayers’ on boarded on the special table. Upon upload of an original or amended VAT return that contains the PIN of a taxpayer who is in the special table, the entry will be rejected by the system and the following message displayed: “This PIN is not liable to input tax deduction”.\nThe affected taxpayers will be required to contact their Tax Service Office for guidance on removal from the VAT Special Table."
}
] |
[
{
"from": "human",
"value": "How do I calculate VAT"
},
{
"from": "gpt",
"value": "VAT operates on an Input - answer Principle. A registered person should maintain a record of his sales and purchases for a tax period.\nInput tax refers to VAT charged on purchases of taxable purchases and expenses for business purposes.\nanswer tax refers to the VAT charged on the sales of taxable goods or services.\nTax payable is the difference between the answer tax and the Input tax.\nanswer Tax - Input Tax = VAT Payable\n If positive, tax due is payable on or before the 20th of the following month."
}
] |
[
{
"from": "human",
"value": "What is exempt from Withholding Tax?"
},
{
"from": "gpt",
"value": "- Dividends received by a company resident in Kenya from a local subsidiary or associated company in which it controls (directly or indirectly) 12.5% or more of the voting power.\n- Marketing commissions and residue audit fees paid to foreign agents in respect of export of flowers, fruits and vegetables.\n- Interest payments to banks and insurance companies.\n- Payments made to tax exempt bodies.\n- Local management and professional fees whose aggregate is below Ksh 24,000 in a month.\n- Air travel commissions paid by local air operators to overseas agents."
}
] |
[
{
"from": "human",
"value": "What is Withholding Income Tax and what type of transactions does it apply to?"
},
{
"from": "gpt",
"value": "Withholding Income Tax is tax withheld at source. A person making certain payments deducts tax, at the applicable rate, and remits the tax to the Commissioner on behalf of the recipient. Examples of payments subject to withholding tax include, among others: \n- Management, professional or training fees\n- Consultancy fees, Legal fees, Audit fees\n- Contractual fees\n- Winnings\n- Appearance at or performance to entertain\n- Royalties\n- Interest and deemed interest\n- Dividends"
}
] |
[
{
"from": "human",
"value": "Can an employer choose to either pay their staff using the withholding tax or PAYE regime?"
},
{
"from": "gpt",
"value": "Employees are subject to PAYE taxes. The rates applicable are the individual tax (graduated scale) rates and the employer may take into account allowable deductions (such as mortgage interest) and reliefs (such as personal relief and insurance relief) when computing the PAYE."
}
] |
[
{
"from": "human",
"value": "What is Turnover Tax (TOT)?"
},
{
"from": "gpt",
"value": "Turnover Tax (TOT) is a tax charged on gross sales of a business as per Sec.12 (c) of the Income Tax Act. The tax is payable by resident persons whose gross turnover is more than Ksh 1,000,000 but less than Ksh 50,000,000 in any given year."
}
] |
[
{
"from": "human",
"value": "What is the effective date of TOT?"
},
{
"from": "gpt",
"value": "1st January 2020"
}
] |
[
{
"from": "human",
"value": "What is the rate of TOT and the due date for filing and paying?"
},
{
"from": "gpt",
"value": "Turnover Tax is charged at the rate of 1% on gross sales. The due date for filing and paying TOT is on the 20th day of the following month."
}
] |
[
{
"from": "human",
"value": "Does the levying of Turnover Tax and Presumptive Tax amount to double taxation?"
},
{
"from": "gpt",
"value": "No. Presumptive tax is an advance tax that shall be deducted from Turnover Tax payable in the subsequent month(s).\nHowever, Presumptive Tax was repealed(wef 25.04.2020)."
}
] |
[
{
"from": "human",
"value": "Are there any exemptions under Turnover Tax?"
},
{
"from": "gpt",
"value": "Income exempt from TOT include;\n- Persons with business income below Ksh 1,000,000 and above Ksh. 50,000,000\nEmployment income,\nRental income,\nManagement and professional services.\nAny income subject to final withholding tax"
}
] |
[
{
"from": "human",
"value": "Can a taxpayer choose not to be subject to Turnover Tax?"
},
{
"from": "gpt",
"value": "Taxpayers who are eligible for Turnover Tax may opt to be under the provisions of this tax by writing to the Commissioner of Domestic Taxes. However this is subject to approval."
}
] |
[
{
"from": "human",
"value": "Is Turnover Tax a final tax?"
},
{
"from": "gpt",
"value": "Yes. Persons who declare and pay Turnover Tax will not be required to file annual income tax returns."
}
] |
[
{
"from": "human",
"value": "What is the penalty for late filing and payment of Turnover Tax?"
},
{
"from": "gpt",
"value": "- TOT late filing payment is Kshs. 1,000 per month (wef 25.04.2020)\n- Late payment penalty is 5% of the tax due.\n- Interest on unpaid tax is 1% of the principal tax due."
}
] |
[
{
"from": "human",
"value": "What are the benefits of Turnover Tax?"
},
{
"from": "gpt",
"value": "1. Reduced expenses; Taxpayers are only required to keep a daily gross sales record, there is no requirement to invest in computers and electronic tax registers\n2. Simplified filing and payment processes including payment through mobile phones.\n3. Reduced time for filing and paying taxes.\n4. The tax rate of 1% is lower relative to other rates of tax on income.\n5. Turnover Tax is a final tax and therefore a person is not required to file the annual income tax return."
}
] |
[
{
"from": "human",
"value": "What is Capital Gains Tax?"
},
{
"from": "gpt",
"value": "Capital Gain Tax (CGT) is tax levied on gains made from the transfer of property situated in Kenya whether or not the property was acquired before 1st January 2015."
}
] |
[
{
"from": "human",
"value": "What is the rate for Capital Gains Tax?"
},
{
"from": "gpt",
"value": "The CGT rate was increased from 5% of the net gain to 15% of the net gain, effective 1st January 2023."
}
] |
[
{
"from": "human",
"value": "When is CGT payable?"
},
{
"from": "gpt",
"value": "The due date (referred to as Tax Point) for CGT is upon registration of the transfer instrument in favor of the transferee"
}
] |
[
{
"from": "human",
"value": "Is Capital gains tax final tax?"
},
{
"from": "gpt",
"value": "Yes. Capital gains tax is a final tax and is not subject to further taxation."
}
] |
[
{
"from": "human",
"value": "Who pays Capital Gains Tax?"
},
{
"from": "gpt",
"value": "Capital Gains Tax is payable by the person who has transferred property (seller). CGT is charged at the point of transfer of property. This is upon registration of the transfer instrument in favour of the transferee indicating transfer of interest in the property from the seller to the purchaser."
}
] |
[
{
"from": "human",
"value": "Is Capital Gains Tax levied on non-resident?"
},
{
"from": "gpt",
"value": "Yes. If the gain is derived from sale of property situated in Kenya then capital gains tax is payable. Unless there is double Tax Agreements guide on certain circumstances."
}
] |
[
{
"from": "human",
"value": "What are some of the exemptions and exclusions?"
},
{
"from": "gpt",
"value": "- Income that is taxed elsewhere as in the case of property dealers.\n- Issuance by a company of its own shares and debentures.\n- Transfer of property for the purpose only of securing a debt or a loan.\n- Transfer by a creditor for the purpose only of returning property used as security for a debt or a loan.\n- Transfer by a personal representative of any property to a person as beneficiary in the course of the administration of the estate of a deceased person.\n- Transfer of assets between spouses or between former spouses as part of a divorce settlement or a bona fide separation agreement;\n- Transfer of assets to immediate family or to a company where spouses or a spouse and immediate family hold 100% shareholding;\n- A gain on transfer of securities traded on any securities exchange licensed by the Capital Markets Authority\n- A private residence if the individual owner has occupied the residence continuously for the three-year period immediately prior to the transfer concerned subject to the provisos under Paragraph 36(c) of the First Schedule to the Income Tax Act, Cap 470.\n- Property (being land) transferred by an individual where the transfer value is not more than three million shillings\n- Property (being land) transferred by an individual is an agricultural property having an area of less than fifty acres where that property is situated outside a municipality, gazetted township or an area that is declared by the Minister, by notice in the Gazette, to be an urban area for the purposes of this Act\n- Property (including investment shares) which is transferred or sold for the purpose of administering the estate of a deceased person where the transfer or sale is completed within two years of the death of the deceased or within such extended time as the Commissioner may allow in writing. Where there is a court case regarding such estate, the period of transfer or sale under this paragraph shall be two years from the date of the finalization of such court case.\n- Property, including investment shares, which is transferred or sold for the purpose of transferring the title or the proceeds into a registered family trust.\n- The transfer of title of immovable property to a family trust.\nA transfer of property that is necessitated by a transaction involving the incorporation, recapitalization, acquisition, amalgamation, separation, dissolution or similar restructuring of a corporate entity, where such transfer is—\n- a legal or regulatory requirement;\n- as a result of a directive or compulsory acquisition by the government;\n- an internal restructuring within a group which does not involve transfer of property to a third party; or\n- in the public interest and approved by the Cabinet Secretary."
}
] |
[
{
"from": "human",
"value": "What is the method of computing Capital Gains Tax?"
},
{
"from": "gpt",
"value": "Transfer value less adjusted cost then tax at 15%.\nFollow this link and learn more on how to compute Capital gains tax.\nhttps://www.youtube.com/watch?v=74Kt4nyUoy4&ab_channel=KRATV%28KenyaRevenueAuthority%29"
}
] |
[
{
"from": "human",
"value": "How does one pay for Capital Gains Tax?"
},
{
"from": "gpt",
"value": "Payment should be initiated online via iTax. Login to iTax >> Payments >> Payment Registration >> Tax head (Income tax), Sub head (Capital Gains Tax)\n>> Enter the transaction details >> Submit. The modes of payment include cash, cheque or RTGS"
}
] |
[
{
"from": "human",
"value": "What is a tax Refund?"
},
{
"from": "gpt",
"value": "It is a reimbursement of excess tax paid in a given period."
}
] |
[
{
"from": "human",
"value": "Who is Eligible for Individual Income Tax Refunds?"
},
{
"from": "gpt",
"value": "Taxpayers eligible for Income Tax refunds fall under the following categories:\n- *Category1:* Life or Education Insurance policy holders. \n - Required documents: Insurance policy certificate and Tax deduction card (Form P9)\n- *Category2:* Home owners with Mortgage from the following financial institutions Banks, Insurance companies, Building Societies, National Housing Corporation. \n - Required documents: Mortgage certificate and Tax deduction card (Form P9)\n- *Category3:* Persons with Disability holding an exemption certificate. \n - Required documents: Exemption certificate and Tax deduction card (Form P9)\n- *Category4:* Taxpayers who have paid tax deducted at source (Withholding Tax) in excess of final liability \n - Required documents: Withholding Tax Certificate and Tax deduction card (Form P9) where applicable.\n- *Category5:* Taxpayers who pays tax in error. \n - Required documents: Relevant documents to prove tax was paid in error.\nSupporting documents should be uploaded in the system and any requested additional documents scanned and sent via email to the officer processing the claim\n> Note: Employees can supply relevant documents to the employer to be granted insurance relief and mortgage deduction through the payroll. It’s only those cases that have not enjoyed this direct credit through their employer that may apply for refund."
}
] |
[
{
"from": "human",
"value": "How do I apply for an income tax refund?"
},
{
"from": "gpt",
"value": "A claim for refund must be made within five (5) years of the date the tax was paid. A decision on the application shall be communicated to the taxpayer within 90 days of receiving the application.\nThe claim must be filed online via iTax as follows: -\n\ti) Log on to https: //itax.kra.go.ke/KRA-Portal/\n\tii) Click the Refund tab. From the drop down menu, select Income Tax.\n\tiii) Click Claim Details Tab and fill the fields available. All fields with * are mandatory.\n\tiv) Attach any supporting documents.\n\tv) Click submit tab.\n\tvi) The claim is automatically allocated to a refunds officer and an Acknowledgement Number generated and sent to the taxpayers through email. This number is used to track the claim.\n\tvii) The taxpayer may track the status of the claim by selecting “Track status of Application” under “Useful Links”.\n> Note: It is important to consult the general ledger in your i-Tax profile to ensure that your employer has accounted for all PAYE deducted from your salary before you lodge your refund claim. Taxpayers are advised to confirm the availability of credits giving rise to a possible refunds before making their application."
}
] |
[
{
"from": "human",
"value": "Which documents will I require to apply for my refund?"
},
{
"from": "gpt",
"value": "- Tax deduction card (Form P.9) for claims relating to excess PAYE deductions\n- Insurance policy certificates for claims relating to insurance relief\n- Mortgage certificate from a financial institution for claims relating to interest on mortgage or home ownership plan\n- Withholding tax certificates for claims relating to tax deducted at source."
}
] |
[
{
"from": "human",
"value": "When should I apply for a tax refund?"
},
{
"from": "gpt",
"value": "Immediately after filing a tax return for the respective year."
}
] |
[
{
"from": "human",
"value": "How do I know if my refund is approved?"
},
{
"from": "gpt",
"value": "1. Upon approval of a claim, the taxpayer is automatically notified via email.\n2. When the funds are disbursed by Finance, the taxpayer is automatically notified through email.\n3. Where claim is supported in all aspects, it is expected be paid within two (2) years from the date the application was lodged. Any amount remaining unpaid after two years will attract an interest of 1% per month or part thereof.\nPlease note that in line with Section 47(4) of the Tax Procedures Act, the refund shall be applied in the following order:\n1. Payment of any other tax owing, by the taxpayer under the same tax law,\n2. Payment of any tax owing by the taxpayer under any other tax law.\n3. Any remainder be refunded to the taxpayer"
}
] |
[
{
"from": "human",
"value": "If I apply for a refund how long will it take to receive the refund?"
},
{
"from": "gpt",
"value": "Where a claim is fully supported in all aspects, it is processed within 90 days from the time of lodgment."
}
] |
[
{
"from": "human",
"value": "How do I know if my refund application is unsuccessful?"
},
{
"from": "gpt",
"value": "Upon rejection of a claim, the taxpayer automatically receives a rejection order via email."
}
] |
[
{
"from": "human",
"value": "Tax Refunds are Applicable under which tax laws"
},
{
"from": "gpt",
"value": "*Applicable law*\n\ti) Income Tax Act Cap 470 (ITA) - Sections 15(3)(b),29,30,31,106 and the Third and Fourth Schedule.\n\tii) Tax Procedures Act, 2015 (TPA) - Sections 47, 48 & 88, 97(b), 104(3), 108\n\tiii) Legal Notice No. 36 of 2010 – The Persons with Disabilities (Income Tax Deductions and Exemptions) Order, 2010"
}
] |
[
{
"from": "human",
"value": "What happens in an instance where a taxpayer is erroneously refunded?"
},
{
"from": "gpt",
"value": "1. Where the Commissioner refunds a person in error, that person shall be required to repay the amount erroneously refunded by the date set in the letter of demand.\n2. If the amount of repaid by the due date in the demand letter, it shall attract a late payment interest."
}
] |
[
{
"from": "human",
"value": "What are the Administrative Penalties & Offences for Making Fraudulent Claims?"
},
{
"from": "gpt",
"value": "According to Section 88, 97(b) & 104(3) of the Tax Procedures Act,A person who makes a fraudulent claim shall be liable to either a penalty or prosecution as follows: \n- A person who fraudulently makes a refund claim shall be liable to a penalty of an amount equal to two times the amount of the claim.\n- A person who knowingly claims a refund which he/she is not entitled to commits an offence and is liable, upon conviction, to a fine not exceeding ten million shillings and/or imprisonment for a term not more than ten years."
}
] |
[
{
"from": "human",
"value": "What are the benefits of tax refunds?"
},
{
"from": "gpt",
"value": "- Tax refunds resulting from zero rating of exportation of goods allow exporters to be more competitive in the foreign market and allow them to plough it back into the business.\n- Ensure affordability of certain goods and services deemed as essentials e.g. zero rating of bread, milk, flour.\n- To ensure equity where tax is deducted in error"
}
] |
[
{
"from": "human",
"value": "What are the types of tax refunds?"
},
{
"from": "gpt",
"value": "*Income Tax Refunds*\nThis refund will arise from tax overpayments by both individual and corporate taxpayers.The following circumstances may lead to an income tax refund:\n- Over deduction of tax(PAYE) by the employer\n- Tax incentives on mortgage interest relief, insurance premium relief, and annual tax relief\n- Exemption on account of disability.\n- Overpayment of Instalment Taxes \n- Withholding Tax\n- Advance Tax credits\n> NB: A claim for an Income Tax refund must be made within five (5) years from the date the tax was paid.\n*VAT Refunds*\nVAT refunds occur as a result of overpayment of taxes as a result of:\n- Excess credits as a result of zero-rated supplies\n- Excess credits arising out of withholding VAT\n- Bad debts- after a period of three years but not more than 4 years from the date of that supply (where a registered person has made a supply and has accounted for and paid tax on that supply and has not received any payment from the person liable to pay the tax)\n*Excise Tax Refunds*\nOccurs when a person dealing with excisable goods manufactured in or imported into Kenya has paid excise duty. The Commissioner shall, on application by the person, refund the excise duty paid if satisfied that.\n- Before being consumed or used in Kenya\n- The goods have been damaged or stolen during the voyage or transportation to Kenya\n- The buyer has returned the goods in accordance with the contract of sale.\n- The excise duty paid in respect of spirits or illuminating kerosene that have subsequently been used by a licensed or registered manufacturer to manufacture un-excisable goods."
}
] |
[
{
"from": "human",
"value": "How can one Apply for a Refund?"
},
{
"from": "gpt",
"value": " 1. Logon to itax.kra.go.ke by entering your KRA PIN and Password\n2. On the iTax menu, select the tax obligation under the refunds menu\n3. Confirm taxpayer details and click next\n4. Fill in the taxpayer’s bank account details and click next\n5. Select your refund type, the claim reason, the description of the reason for the claim, the amount, upload supporting documents then submit."
}
] |
[
{
"from": "human",
"value": "Tips For Applying For Refunds"
},
{
"from": "gpt",
"value": "- Apply for claims via iTax within the stipulated period.\n- All claims must have valid debt status reports before refund processing.\n- All first-time claimants will be subjected to a pre-payment audit"
}
] |
[
{
"from": "human",
"value": "Tax Refund Offences"
},
{
"from": "gpt",
"value": "Fraudulent/false claim of refund will attract a penalty of an amount equal to two times the amount of the claim."
}
] |
[
{
"from": "human",
"value": "How do i be compliant with KRA tax regulations?"
},
{
"from": "gpt",
"value": "There are several ways you can be compliant. It mainly depends on the yearly revenue generated by your business.\nWhat is the revenue for your business so that I can give you the correct taxes?\nIs it:\n1. Below 5 million KES\n2. Above 5 million?\nNote: Please write the full answer."
}
] |
[
{
"from": "human",
"value": "My company revenue is below 5 million KES"
},
{
"from": "gpt",
"value": "Given your revenue is below 3 million KES, you are required to pay either turnover tax (tot) or income tax.\nWhich one would you like to know more about?"
}
] |
[
{
"from": "human",
"value": "turnover tax"
},
{
"from": "gpt",
"value": "Turnover Tax (TOT) is payable by resident persons whose gross turnover from business is more than Kshs. 1,000,000 and does not exceed or is not expected to exceed Kshs 50,000,000 in any given year \nTOT does not apply to:\n1. Persons with business income below Ksh. 1,000,000 and above Kshs. 50,000,000 per annum\n2. Rental Income,\n3. Management, Professional and Training Fees, \n4. Any income that is subject to a final withholding tax under the Income Tax Act"
}
] |
[
{
"from": "human",
"value": "what is the rate of turnover tax"
},
{
"from": "gpt",
"value": "Turnover Tax (TOT) is charged at the rate of 1% of gross monthly sales. Kindly note that expenses are not deductible when calculating TOT. TOT will be filed and paid on a monthly basis. The due date is on or before 20th of the following month."
}
] |
[
{
"from": "human",
"value": "income tax"
},
{
"from": "gpt",
"value": "Income tax is a tax you pay annually depending on your calendar year. It is a tax on the net profit of your business and is payable before 30th of June every year.\nIncome tax is a tax charged for each year of income, upon all the income of a person whether resident or non-resident, which is accrued in or was derived from Kenya.\nIncome Tax is imposed on;\n1. Business income from any trade or profession\n2. Employment income\n3. Rent income\n4. Dividend and Interests\n5. Pension income\n6. Income from a Digital Marketplace\n7. Natural resource income among others\n There are different methods of collecting income tax from companies & partnerships, based on their sources of income."
}
] |
[
{
"from": "human",
"value": "My company revenue is above 5 million KES"
},
{
"from": "gpt",
"value": "Given your revenue is above 5 million KES, you are required to pay either turnover tax (tot), income tax and mandatory VAT.\nWhich one would you like to know more about?"
}
] |
[
{
"from": "human",
"value": "VAT"
},
{
"from": "gpt",
"value": "VAT is a tax you pay on the 20th of every month. It is a tax valued at 16% of the total sales of your business. It is a tax that is paid by the consumer but collected by the business. While companies & partnerships can voluntarily register for VAT they MUST register if their annual revenue exceeds Kshs. 5,000, 000."
}
] |
[
{
"from": "human",
"value": "How do I file my returns?"
},
{
"from": "gpt",
"value": "1. Login to iTax\n2. Under the returns menu, select file return, then turnover tax and download the excel return.\n3. Complete the return and submit\n4. After filing the return, go to payment menu, select 'payment', select the amount payable, and generate a payment slip.\n4. Make the payment at a partner bank or through M-pesa\nYou can now also file and pay your TOT using the new KRA M-service App, it is downloadable on Google Play Store."
}
] |
[
{
"from": "human",
"value": "What is the penalty for non compiance?"
},
{
"from": "gpt",
"value": "- TOT late filing penalty is Kshs. 1,000 per month\n- Late payment penalty is 5% of the tax due\n- Interest on unpaid tax is 1% of the principal tax due."
}
] |
[
{
"from": "human",
"value": "How do I register for a PIN?"
},
{
"from": "gpt",
"value": "PIN registration for both companies and partnerships is initiated online via iTax.\nFollow these easy steps;\n1. Visit iTax\n2. Select `New PIN Registration`.\n3. Fill the online form appropriately.\n4. Upload relevant documents (business registration certificate details, PINs of the company directors and the National IDs)\n5. Submit online application\nNOTE:\nYou will receive an acknowledgment receipt on completion of the online application."
}
] |
[
{
"from": "human",
"value": "What is the difference between a sole proprietor and a limited company?"
},
{
"from": "gpt",
"value": "For a sole proprietor, you are liable for any losses or lawsuits that can be brought against your business. You are also responsible for all the debts of the business. A limited company is a separate legal entity from its owners. This means that the company is responsible for its own debts and lawsuits. The owners are not personally liable for the debts of the company. The company can also continue to exist even if the owners die or leave the company."
}
] |
[
{
"from": "human",
"value": "What is eTims?"
},
{
"from": "gpt",
"value": "eTIMS (electronic Tax Invoice Management System) is a software solution that provides taxpayers with options for a simple, convenient and flexible approach to electronic invoicing.\nTaxpayers can access eTIMS on various computing devices, including computers, laptops, tablets, smartphones, and Personal Digital Assistants (PDAs)."
}
] |
[
{
"from": "human",
"value": "Who should use eTims?"
},
{
"from": "gpt",
"value": "Every person carrying out business in Kenya is required to on-board eTIMS to issue electronic tax invoices and transmit the invoices to KRA through the system. Persons in business include:\na.Companies, partnerships, sole proprietorships, associations, trusts etc.\nb.Persons with income tax obligations including:\n\t-Monthly Rental Income (MRI) Tax\n\t-Turnover Over Tax (TOT)\n\t-Annual Income Tax – for Corporations, Partnerships and Individuals, both resident and non-residents with a permanent establishment.\nc.Persons conducting business in various sectors, including the informal sector.\n d.Persons in business whether or not registered for VAT. Persons in business but not required to register for VAT e.g. persons supplying VAT exempt goods and services such as hospitals supplying medical services, schools supplying education services, tours and travel agents, NGO's in business etc are also required to on-board on eTIMS.\nNote: VAT registered persons who did not adopt the TIMS ETR device will be required to onboard onto eTIMS."
}
] |
[
{
"from": "human",
"value": "Why is it not just for VAT registered taxpayers?"
},
{
"from": "gpt",
"value": "The law requires that for any person to claim their business expense, the expense must be supported by an electronic tax invoice. Therefore, all persons engaged in business are required to issue electronic tax invoices, whether registered for VAT or not (non-VAT taxpayers). "
}
] |
[
{
"from": "human",
"value": "Why eTIMS?"
},
{
"from": "gpt",
"value": "1. It aids in reducing compliance costs as the solutions are provided free of charge;\n2. eTIMS offers flexibility in the solutions available and is accessible on various computing devices;\n3. The stock management module assists taxpayers maintain their own inventory;\n4. eTIMS allows taxpayers to a maintain record of invoices issued on the taxpayer portal;\n5. eTIMS facilitates simplified return filing for taxpayers."
}
] |
[
{
"from": "human",
"value": "If I already have the TIMS ETR device, do I still need to onboard eTIMS?"
},
{
"from": "gpt",
"value": "VAT registered taxpayers who adopted the TIMS ETR may continue to use the devices for purposes of invoicing and transmitting tax invoices to KRA.\n However, anyone facing technical challenges using TIMS ETR devices, is encouraged to migrate to eTIMS to allow business continuity. For such cases, the taxpayer will be required to retire/de-activate their ETR device by accessing the \"TIMS Menu\" in their iTax profile and clicking on the sub menu \"Retire Control Unit Device\" to initiate the process."
}
] |
[
{
"from": "human",
"value": "Why should a person or business onboard eTIMS?"
},
{
"from": "gpt",
"value": "i. The requirement to onboard eTIMS and issue eTIMS compliant invoices is anchored in law.\nii. With effect from 1st January 2024, any person making deductions for business expenditure such as purchases and other business costs for income tax purposes is required to support such expenditure with a valid electronic tax invoice.\niii. Failure to issue TIMS ETR or eTIMS compliant tax invoices to your customers will deny them the ability to claim the expense when filing their income tax returns for periods commencing 1st January 2024.\n NB: However, some valid business costs such as emoluments, imports, investment allowances, interest and air passenger ticketing have been excluded from the requirement of being supported by an eTIMS invoice."
}
] |
[
{
"from": "human",
"value": "How much does it cost to onboard eTIMS?"
},
{
"from": "gpt",
"value": "No.\nThe eTIMS software is offered free of charge by KRA, i.e. the online portal and eTIMS client software.\nHowever, businesses that are integrating their invoicing system directly to eTIMS may incur costs if they opt to partner with one of the approved 3rd party integrators, as opposed to self-integration"
}
] |
[
{
"from": "human",
"value": "How can I onboard onto eTims"
},
{
"from": "gpt",
"value": "Step 1: Go to the eTIMS Taxpayer Portal etims.kra.go.ke\nStep 2: Click on the Sign-Up button and input your PIN.\nStep 3: One Time Password (OTP) will be sent to your iTax registered mobile number.\nStep 4: Input the OTP sent to your registered mobile number on the sign up page and you will be prompted to create a password for your profile.\nStep 5: Log in to the eTIMS taxpayer portal using your User ID (KRA PIN) and the password created during sign up.\nStep 6: Click on the Service Request button and select your preferred eTIMS software solution listed under the “eTIMS Type” menu.\nStep 7: Upload the following documents:\n\tA copy of the National ID of:\n\ti. At least one of the directors for Companies\n\tii. At least one of the partners for Partnerships\n\tiii. The business owner for sole proprietorships\n\tiv. Duly filled Commitment form.\nStep 8: Submit your application. An authorized KRA officer will verify the application and approve as appropriate.\nStep 9: Install and configure the eTIMS software on the preferred device:\n\ti. For self-installation, one can access the ‘User Guides’ as found in the KRA website and ‘How to Videos’ on the KRA YouTube channel\n\tii. Taxpayers can also visit the nearest KRA office for assistance."
}
] |
[
{
"from": "human",
"value": "What should I do if I get an error message when I input my PIN during sign up?"
},
{
"from": "gpt",
"value": "If you input your PIN and get an error message, kindly email [email protected] for assistance"
}
] |
[
{
"from": "human",
"value": "What should I do if I do not receive the One Time Password (OTP) during sign up?"
},
{
"from": "gpt",
"value": "1. Confirm that you have access to your iTax registered mobile number. If not, you will be required to update your mobile number through your iTax profile in order to complete the sign up process.\n2. Activate promotional messages on your mobile phone in order to receive the OTP."
}
] |
[
{
"from": "human",
"value": "How can I retrieve my lost password?"
},
{
"from": "gpt",
"value": "Reset your password on the eTIMS Portal by clicking on the link “Forgot password”."
}
] |
[
{
"from": "human",
"value": "Does eTims provide stock management?"
},
{
"from": "gpt",
"value": "Yes.\nIt is available for persons supplying goods. The eTIMS software supports stock management for both sales (outgoing stock) and purchases (incoming stock). The stock management modules are configured during installation of the software."
}
] |
[
{
"from": "human",
"value": "Can I use the same electronic device to install the eTIMS software for different companies?"
},
{
"from": "gpt",
"value": "No.\nThe eTIMS client software can only be installed on one device per taxpayer, for those selling goods.\nHowever, for taxpayers supplying services only, the online portal is accessible on any device since it is a web-based solution."
}
] |
[
{
"from": "human",
"value": "Is it possible to integrate my billing system with eTIMS?"
},
{
"from": "gpt",
"value": "Yes.\nIt is possible through a system to system integration. This integration is possible via the Virtual Sales Control Unit (VSCU) or Online Sales Control Unit (OSCU).\nKRA has appointed 3rd party integrators to facilitate the integration process for taxpayers.\nBelow is the list of approved 3rd party integrators:\n1. Advatech Office Supplies LTD (+254728333111)\n2. Stanbest Group (EA) Limited (+254715713475/ 86/88/ 93/ 97)\n3. Namiri Technology Limited (+254112685368)\n4. Interswitch East Africa (K) Limited (+254703053200)\n5. Deities Technologies Limited (+254701051689)"
}
] |
[
{
"from": "human",
"value": "How can one be certified as an eTIMS third-party integrator?"
},
{
"from": "gpt",
"value": "Information on how a person can be certified as a 3rd party integrator or as a self-integrator is available on the KRA website under the eTIMS menu."
}
] |
[
{
"from": "human",
"value": "Is it possible to re-install the eTIMS client software from one device to another?"
},
{
"from": "gpt",
"value": "Yes.\nIt is possible. However, you will be required to visit the nearest KRA office for assistance. The following will be required:\n\ni. In case the device was stolen, provide the Occurrence Book (OB) report from a police station confirming theft of the device.\n\nii. In case the device malfunctioned, provide a job card from a qualified technician confirming the malfunction.\n\niii. In any other case such as software upgrade or change of device, provide relevant supporting documents."
}
] |
[
{
"from": "human",
"value": "Does one require internet connectivity to invoice through eTIMS?"
},
{
"from": "gpt",
"value": "-For the online solutions, i.e. online portal and Online Sales Control Unit (OSCU), a stable internet connection is required to generate invoices.\n-For the other solutions i.e. eTIMS Client and VSCU, in case of internet downtime, the solutions will allow you to continue generating tax invoices. However, once your internet connection is restored and is stable, the generated invoices will be transmitted to KRA."
}
] |
[
{
"from": "human",
"value": "How can one verify whether an electronic tax invoice is valid?"
},
{
"from": "gpt",
"value": "1. Scan the QR code.\n2. Input the invoice number on the `Invoice number checker` menu on the iTax portal"
}
] |