Tax Alert

On 26th June 2023, the President assented to law the contentious Finance Bill, 2023 which brought a myriad of changes among them the affordable housing levy. I have used the word contentious because shortly after the Act was assented into law, its legality was challenged at the High Court of Kenya which subsequently suspended the implementation of the Act.

The purchase of land or property is major decision and therefore, all aspects that have a financial implication should be properly evaluated. It is important for the buyer to take into consideration all the tax implications in order to avoid instances of incompliance. The purchaser is required to pay stamp duty on the acquisition of a property. The stamp duty is calculated at the rate of 4% of the property...

Landlords in Kenya are required to account for tax on rental income either on monthly basis or annually depending on the nature of the rental income received.

Section 35 (1)(c) of the Income Tax Act provides that any person making payment to any non-resident person is required to withhold tax on payments of rent, premium or similar consideration for the use or occupation of property.

Installment tax is advance tax which is payable during the year of income. This is done before the accounts are done and finalized at year end in order to establish the actual tax payable.

The Kenyan law provides for a simplified tax regime on residential rental income ranging from KES 288,000 to KES 15,000,000 per annum. Under this regime, tax is calculated as 10% on gross rent received and is a final tax.