Highlights of the 2020 Kenya Finance Act

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August 2020

Overview

Recently, the number of taxation regimes for companies under the Kenya Income Tax Act (ITA) significantly increased. The main corporate tax changes include the introduction of the minimum tax and the digital services tax. The ITA already included regimes for withholding taxes, corporate income tax, capital gains tax, residential rental income tax, and a turnover tax, among others. 

The newly introduced bases of taxation are in the form of a transaction tax or a turnover tax. This represents a shift from a tax based on income earned as was envisaged in the original ITA. In addition, Finance Act 2020 introduced an amnesty programme in the form of a Voluntary Tax Disclosure Programme (VTDP) for a period of three years effective January 1, 2021.

The takeaway

There are many ongoing tax reforms in Kenya based on the government’s efforts to increase internally generated revenue. It is important to keep abreast of these and other relevant changes that may impact investments or prospective investment in the region

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Doug McHoney

International Tax Services Leader, PwC US

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