BY JOHN MWANGI
FINANCE BILL 2015 HIGHLIGHTS
The tax rate for individual employment income has remained the same from the year 2005 to 2015.
Employees with only one employment income covered under pay as you earn will be required to file an Income Tax Return.
Pay as you earn on director’s remuneration to be paid on tenth day following the end of the month in which payment was made to the director or on before the last day of the fourth month after the accounting date, whichever is earlier (with effect from 11th June 2015).
Winnings payable to players by the bookmaker will be taxed at 20% final tax for residents with effect from 1st January 2016.Training fees shall not include fees paid for educational services provided by;
- A pre primary, Primary and Secondary school
- A technical college or university
- An institution established for the promotion of adult education, Vocational training or technical education (This is with effect from 1st January 2016)
Residential Rental Income will tax at 10% on gross rental income for any resident person with residential property earning total income of less than 10 millions.
With effect from 1st July 2015 Landlords who declare their 2014 and 2015 rental income by 30th June 2016 will enjoy a tax amnesty. Rental income earned for 2013 and prior years will not be subject to tax penalties and interest and shall be evaluated as follows;
- Where a person does not have supporting for expenditure, then 40% of Gross rent shall be allowed for deduction
- This shall not apply to cases under audit or investigation by KRA and Incomes already assessed.
Transfer of property on administration of an Estate of a deceased person is exempt from tax for a period of 2 years, in case of a court case for a period of 2 years after finalisation of the court case (with effect from 1st January 2016). Gain derived from transfer of property of land which is less than 3 Millions (Previously 30,000/=) or in case of agricultural property which is less 50 acres (previously 100 acres), on certain areas will be exempt from tax with effect from 1st January 2016.
The due date for paying capital gains, other than investment shares shall be on or before the date of application for transfer of property to the land office with effect from 1st January 2016.
The tax rates for Companies have remained the same from year 2000 to 2015.
Net gain arising from sale of immovable property (rights for mining and petroleum) if 20% or more then will be taxable beginning 1st January 2016. Losses shall now be carried forward for 10 years as previously was five years.
However, losses can be carried forward for more than 10 years on extension by the minister upon recommendation by the commissioner. Sources of income have increased to include mining and petroleum block with effect from 1st January 2016.
Employer who engages at least 10 university graduates as apprentices for a period of six to twelve months during any year of income shall be eligible for tax rebate in the year subsequent to the year of such engagement with effect from 1st January 2016.
Building in use for training of film producer, actors or crew to enjoy Industrial building Allowance of 100% starting 1st January 2016.
Purchase of new or unused power driven ship or purchase (and subsequent refitting for the purpose of that business) of a used power driven ship of more than 125 tonnes shall enjoy Ship investment deduction of 100% with effect from 1st January 2016.
The corporate tax for listed companies on the securities exchange to be 25% for 5 years of the listing starting 1st of January 2016.
Companies under special economic zones to be taxed at 10% for the first 10 years and 15% for the next 10 years with effect from 1st January 2016.
Bookmakers will be required to withhold 7.5% of the winnings payable to a Non resident with effect from 1st January 2016 and 20% for resident which has remained the same from 1st January 2014.
Special economic Zones will be required to withhold 10% of the payments other than dividends made to a non-resident.
Rent, premium or similar considerations for use or occupation of immovable property by a resident to withhold 12% of the gross amount with effect 1st January 2016.
For non-resident subcontractor who derives a fee for provision of services to licensee or a contractor, the contractor will be required to withhold 5.625% of the fees. In case of Management, training and professional fees paid by miners they will be required to withhold 12.5% of the fees with effect from 1st January 2016.
VALUE ADDED TAX.
The threshold limit for registration for VAT remains at Sh.5 millions. VAT rate has remained at 16% since 13.06.2003. Refund claims where input taxes exceeds output tax resulting from zero rated supplies, to be filled within 12 months from the date the tax becomes due and payable with effect from 12th June 2015.
Government ministries, Agencies etc appointed by KRA shall be required to withhold 6% of the taxable value as withholding VAT with effect from 12th June 2015.
Resident returning from countries that operate left hand drive motor vehicles who has owned and used a left hand drive motor vehicle for at least 12 months, may sell the vehicle and import a right hand drive vehicle of equivalent value, make, engine rating and year of manufacture without being charged VAT and custom duty.
The above are a few highlights only
The author is an auditor in one of the leading auditing firm in Nairobi.
For specific need contacts
BY CPA John Mwangi .