Tax Administration - Quartet Consulting

TAX ADMINISTRATION:

Last reviewed – 26 February 2025

Tax Returns

Resident companies and permanent establishments (PEs) of non-resident companies must file annual self-assessment tax returns.
Returns must include tax computation, financial statements, and other schedules.
Filing deadline: Within six months after the financial year-end.

Taxable Period

Companies may determine their financial year-end, provided it spans 12 months. Any changes require approval from the Commissioner of the Kenya Revenue Authority (KRA).

Agency Tax Payments

Withholding tax and other deductions must be remitted by the 20th day of the following month.

Tax Payment Schedule

Company Type	Installment Tax Payments
General Companies	Four instalments: 20th of the 4th, 6th, 9th, and 12th month, based on the lower of 110% of prior year liability or an estimate of current year liability.
Agricultural Companies	Two instalments: 75% and 25%, with any balance payable within four months after year-end.

Tax Procedures Act (TPA)

Effective since 19 January 2016, ensuring uniform tax procedures and compliance.
Taxpayers must maintain records for five years.
The Finance Act, 2023 introduced section 23A, requiring businesses to adopt an electronic tax system for issuing invoices and stock records.
The Tax Procedures (Amendment) Act, 2024 extended a tax amnesty, waiving interest, penalties, and fines if the principal tax is paid by 31 December 2023. Taxpayers can apply for amnesty by proposing a payment plan by 30 June 2025.
Section 37F allows the Commissioner, with Cabinet Secretary approval, to waive uncollectible taxes under specific conditions, with public disclosure in the Gazette every four months.

Tax Audit Process

No fixed audit cycle, but typically conducted every two to four years.
Triggered by risk-based factors, requiring taxpayers to provide relevant records upon request.

Tax Appeal Tribunal Act

Established on 1 April 2015 to handle all tax-related appeals.
Replaced previous separate committees for income tax and VAT matters.

Statute of Limitations

KRA must issue tax assessments within five years of the tax return filing.
No time limit for audits, but they are generally completed efficiently unless disputes arise.
Fraud cases allow for review beyond five years.

Key Focus Areas for Tax Authorities

Strengthening fraud detection and tax evasion control through data analytics and intelligence.
Enhancing revenue collection using risk-based decision-making approaches.

TAX ADMINISTRATION:

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