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[
{
"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."
}
] |