The Finance Bill, 2026

SPECIALISSUE

Kenya GazetteSupplement No.113(National Assembly Bills No.26)

KENYA GAZETTE SUPPLEMENT

NATIONALASSEMBLYBILLS,2026

NAIROBI,5thMay,2026

CONTENT

| Bill for Introduction into the National Assembly- | PAGE | |-----------------------------------------------------|--------| | The Finance Bill,2026 | .953 |

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THEFINANCEBILL,2026

A Bill for

AN ACT ofParliament to amend the laws relating to various taxes and duties;and formatters incidental

• thereto

ENACTED bytheParliamentofKenya,asfollows-

PARTI-PRELIMINARY

1. This Act may be cited as the Finance Act,2026, and shall come into operation as follows- 2. (a)on1st January,2027,sections19,20,25,35,36 37(a)(i),59(a)(ii).59(b)(ii),32(a)(x) new paragraph 163; 3. (b)all other sections,Ist July.2026.

PARTII-INCOMETAX

2. Section 2 of the Income Tax Act isamended in subsection(l)- 2. (a) in the definition of"immovable property",by deleting the word"and"appearing immediately after the words"immovable property"the end of item(a),and substituting therefor the word"or"; 3. (b) in the definition of"management or professional fee",by insertingthewords"and includes interchange fees and merchant service fees arising from transactions that use a card as a means ofpaymentimmediately after theword "calculated"; 4. (c)by deleting the definition of "royalty" and substituting therefor the following new definition-

"royalty"means a payment made as a consideration for-

• (a)the use or the right to use-
• (i)
• any copyright of a literary,artisticor scientific work;
• (ii) any software,proprietary or off-the-shelf, whetherin theform of licence,development, training,maintenance or support fees;

Short itle and

commencement

Amendment of section 2ofCap. 470.

• (ii)any cinematograph film including a film or tape forradio or televisionbroadcasting;
• (iv) any patent, trademark, design or model, plan,formulaorprocess;
• (v) any industrial,commercial or scientific equipment;
• (vi)information concerning industrial, commercial or scientificequipmentor experience,and any gains derived from the sale or exchange of any right or property giving rise to that royalty:or
• (vii) aproprietary digital platform,payment network,payment-card scheme, payment processing system, switching system, clearing system or settlement system, including access. participation or usage rights in such system through a card, whether the consideration is periodic or transaction-based and whether or not the payment is described as a service fee, transaction fee.network fee,assessment fee, processing fee or similar charge:or
• (b)thedistributionof softwarewhereregular payments are made for the use of the software through the distributor;
• (d)by deleting the definition of"withdrawals"and substituting therefor the following new definition:

"withdrawals" means any amount of money,cash equivalent,or money's worth paid or disbursed to the account of a player,by a person licensed issued under the Gambling Control Act.2025;

• (e) by inserting the following new definition in proper alphabetical sequence-

"winnings" means a pay-out, by a person licensed lottery or prize competition under theGambling Control Act,2025,but does not include the amount staked or

issued under the Gambling Control Act,2025, from a wagered.

No.15of2025

• 3.Section 5 of the Income Tax Act is amended in
• subsection(4)-
• (a)i in the proviso to paragraph (g),by inserting the followingnew paragraph immediately after paragraph (b)-
• (c) the gratuity was fora contract of servicefor a continuousperiod ofat least threeyears:
• (b)by inserting the following new paragraph immediately after paragraph (g)-—
• (ga) any contribution to a gratuity in respect of employment orservicesrendered:

Provided that-

• (i) thegratuitywasfora contractofservicefor
• (ii) the total contributions does not exceed
• thirty-one per cent of the basic salary of the employee;and
• (ii)this paragraph shall not apply to any person
• who is eligible for deductions under section 22A.
• 4.The Income Tax Act is amended by inserting the
• followingnewsection immediately after section 6A-

Imposition ofnon-

resident rental income tax.

• 6B.(1) Where the income of a nonresidentperson isaccrued in orderived from the use or occupation of property situated in Kenya,a tax to be known as non-resident rental income tax shall be payable by that non-residentperson at the rate specified in the Third Schedulewhich shall bea final taxon the income.
• (2) A non-resident person subject to the taxpayable under subsection(1) shall-
• (a)register and account for thetax through a simplified registration framework prescribed by the Commissioner;and

Amendment of section5of Cap 470.

Insertionof a new section 6Bto Cap

470.

• (b)submit a return andpay the tax due on or before the twentieth day of the monthfollowing theendof themonth forwhich the rent is paid.
• (3)Subsection (2) shall not apply where the income accrued in or derived from the use or occupation of the property received bya residentperson on behalf of the non-resident person who is subject to the deduction of tax
• specified in section35(3)(j).
• 5.Section 8 of the Income Tax Act is amended by
• deleting subsection(5A).
• 6.Section9 of theIncome Tax Act is amended by inserting the following new subsectionimmediately after subsection(l)-
• (lA) The tax charged under subsection (1)shall be payable within five days after the payment isreceived or the ship leaves the port of lading,whichever is earlier.
• 7.Section 10 of the Income Tax Act is amended in subsection (l),by inserting the following new paragraphs immediately after paragraph (m)-
• (n) sale of scrap metal;
• (o)winnings.
• 8.The Income Tax Act is amended by repealing section 1l and replacing it with the following new section-

deemedincomeof

Trust income trustee

• 11.(1) Any income chargeable to tax and received by a person in the capacity of a trustee,executor or administrator,shall be deemed to be the income of that trustee, executor or administrator.
• (2) Dividend or interest which is included in the income of the trustee,executor or administrator under subsection (1) shall not be subject tofurther taxunder thisAct.

Amendment of

section8of Cap 470.

Amendment to section9of Cap 470.

Amendmen to section 10of Cap 470.

Repeal and replacement of section ll of Cap 470.

• (3) Wherea trustee,executor or administrator haspaid tax on the chargeable income of the trust,a beneficiary of the trust shall notbe liable topay tax on that income.

2. 9.Section 12of the Income Tax Act is amended in 3. subsection (1),by deleting paragraph (a)and substituting therefor thefollowingnewparagraph- 4. (a)if to thebest ofhis judgement and belief he will haveno incomechargeable to taxfor thatyear of 5. incomeother than emoluments. 6. 10.Section 15of the Income TaxAct is amended in 7. subsection (2),by inserting the following new paragraph immediatelyafterparagraph(ae)- 8. (af) in the case of an employee,the amount of interest, not exceeding three hundred and sixty thousand shillings,deducted for the repayment of a loan advanced by theCentral BankofKenya for the construction,purchase or improvement of a house occupied by the employee. 9. 11.Section 16 of the Income Tax Act is amended in 10. subsection(2)(j)(iii)(E)by deleting the words"lending and and substituting therefor the words"lending or leasing business,or both" 11. 12.Section 18Dof theIncomeTaxActis amended- 12. (a) in subsection (1),by deleting the expression "subsection (3)"appearing after the words "accordance with"and substituting therefor the expression"subsection(2)": 13. (b) in subsection (2).by deleting the expression "subsection (1)" appearing after the words "accordance with"and substituting therefor the expression"subsections(l)and (lA)"; 14. C in subsection (5),by deleting the expression "subsection (1)" appearing after the words "accordance with"and substituting therefor the expression"subsections(l) and (iA)"

Amendment of section12of Cap

470

Amendment of section15of Cap 470.

Amendment of section16of Cap.

470

Amendment of section18Dof Cap.470.

13.Section 18Fof theIncome TaxAct is amended

• (a) in the definition of"a country-by-country report", appearing after the words "filed under"and
• by deleting the expression "section 18D(1)" substituting therefor the expression "section 18D(1)and(IA)";
• (b) in the definition of "excluded multinational enterprise group"by deleting the expression "section18D(1)" appearing after the words "specified in"and substituting therefor the expression"section 18D(1B)";
• (C) by deleting the definition of "ultimate parent entity" and substituting therefor the following new definition-
• "ultimate parent entity"means a constituent entity of a multinational enterprise group where-
• (a) theconstituent entity owns directly or indirectlya sufficient interest in one or more other constituent entities of the multinational enterprise group;
• (b) the constituent entity is required to prepare consolidated financial statements under accounting principles generally applied in its jurisdiction of tax residence,or would be so required if its equity interests were traded on a public securities exchange in its jurisdiction of tax residence;and
• (C) there is no other constituent entity of the multinational enterprise group that owns directly orindirectlya sufficient interest in anyofthe other constituent entities of the multinational enterprise group.
• 14.Section 19 of the Income Tax Act is amended-
• (a)in subsection(5)-
• (i)by deleting the words "life insurance fund" appearing in paragraph (a) and substituting therefor the words"statutoryfund";and

Amendmentof

section 18Fof Cap.470.

Amendmentof section 19of Cap

470.

• (ii)by deleting the words "life insurance fund"
• appearing in paragraph (b) and substituting therefor the words"statutory fund";
• (b)in subsection (5A).by deleting the words"life insurancefund"wherevertheyoccur and substituting therefor the words"statutory fund";
• (C) in subsection (6),by deleting the words "life insurance fund"appearing in paragraph (b) and substituting therefor thewords"statutory fund";
• (d) in subsection (6A),by deleting the words "life insurancefund"wherevertheyoccur and substituting therefor the words"statutoryfund";
• (e) in subsection 7-—
• (i)in the definition of "annuity fund",by
• deleting the words "life insurance fund" wherevertheyoccurand substituting therefor thewords"statutory fund";
• by deleting the definition oflife insurance fund";
• (ii) by inserting the following new definition in
• proper alphabetical sequence-

means fund established undersection45oftheInsurance

"statutoryfund" Act.

15. The Income Tax Act is amended by repealing section23. 2. 16.Section 24 of the Income TaxAct is amended in subsection (l),by deleting the words "that part of the income"appearing after the words"he may direct that" and substituting therefor the words"at least sixty per cent of thatpart of the income" 3. 17.Section 35 of the Income Tax Act is amended- 4. (a) 5. in subsection (1)- 6. (i) by deleting subparagraph (ii) appearing in 7. paragraph(a); 8. (ii)by deleting paragraph (u); 9. (ii) by adding the following new paragraphs immediately after paragraph(u)-

Cap.487.

Repeal of seetion

23A of Cap.470.

Amendment of

section24of Cap. 470

Amendment of section 35 of Cap. 470.

• (v) the sale of scrap metal;
• (w)winnings;
• (b) in subsection (3),by adding the following new
• paragraph immediately after paragraph(o)-
• (p) the sale of scrap metal;
• (q)winnings.
• 18.Section 52 of the Income Tax Act is amended-
• (a) in subsection (1),by deleting the words"within a reasonable time,not being less than thirty days from the date of service of the noticeappearing immediately after the words"furnish him",and substituting therefor thewordsby the last day of the fourth month following the end of the person's year of income";
• by inserting the following new subsection
• (b) immediately after subsection (l)-
• (iA)Where the tax return submitted under subsection (1) relates to a nil amount of tax payable,the person required to submit the tax return shall submit the return within onemonth following theendof theyear ofincome
• to which the return relates.
• 19.Section 52B of the Income TaxAct is amended-
• (a)in subsection (1)-
• (i) by deleting the words "including a selfassessment ofhis tax from all sources of income,not later than the last day of the sixthmonthfollowing theend ofhisyearof income"appearing in paragraph (i) and substituting therefor the words"by the last dayof thefourthmonthfollowingtheend of theperson'syearofincome";
• (ii) by deleting the words "including a selfassessment of his tax from all sources of income,not later than the last day of the sixthmonthfollowingtheend ofhisyear of income"appearing in paragraph (i) and substituting therefor the words "by the last

Amendmentof section52 of Cap 470.

Amendment of

section52Bof Cap.470.

day ofthefourth month following theend of the person's year of income;

• inserting the following new subsection
• (b)by immediately after subsection(1)-
• (lA)Where the taxreturn submitted under subsection (1) relates to a nil amount of tax payable,the person required to submit the tax return shall submit the return withinonemonthfollowing theendoftheyearofincome to which thereturn relates.
• 20.Part Iof the First Schedule to the Income Tax is amended-
• (a)in paragraph 53,by inserting the following proviso-
• (d)benefits arising due to death;
• (b) inserting the following new immediatelyafterparagraph75-
• paragraph
• 76.Any capital gains relating to the transfer of
• property toa real estateinvestmenttrustregistered by the Commissioner under section20(1).
• 21.The Second Schedule to the Income Tax Act is amended in the table appearing in paragraph 1(l),by adding the words"per year,inequal instalments immediately after the expression"i0%"appearingin item (a)(vii).
• 22.Head B of the Third Schedule to the Income Tax Act is amended-
• (a)
• in paragraph 2,by deleting subparagraph (i);
• (b)
• inparagraph 3-
• (i)by deleting the proviso to subparagraph(d);
• (i) by inserting the following new subparagraphs immediately after subparagraph(w)-
• in respect of the sale of scrap metal,one and a halfper cent of thegross amount;
• y
• in respect ofwinnings,twenty percent;

Amendmentof theFirst Schedule to Cap.470.

Amendment of the Second Schedule to Cap. 470.

Amendment of the Third Schedule to Cap. 470.

• (c)in paragraph 5,inserting the following new subparagraphs immediately after subparagraph (p)-
• (b)
• in respect of the sale of scrap metal, one and a halfper cent of thegrossamount;
• (r)
• in respect ofwinnings,twenty per cent.
• 23.Paragraph 2 of the Eighth Schedule to the Income
• Tax Act is amended-
• (a) in subparagraph (c),by deleting the expression "subparagraph(a)"appearing immediately after the words "to which"and substituting therefor the expression"subparagraph(b)";
• (b)
• by inserting the following new subparagraph immediately after subparagraph(c)-
• (d) gains derived from the alienation of shares by a non-resident person where the shares derive their value from Kenya or the alienation results in a change of the group membership ofa company residentin Kenya or ofownership of,titlein,or interest inproperty located inKenya.
• 24.The Ninth Schedule to the Income Tax Act is
• amended-
• (a) in paragraph 2,by insertingt the following new subparagraph immediately after subparagraph (3)-
• (4) The non-resident tax rates for repatriated income
• by a licensee under section 7B shall be fifteenper cent.
• (b)in paragraph 7-
• (G in subparagraph (3),by deleting the words "thirty-seven and a half percentappearing in item (b)immediately after thewords"nonresident company"and substitute therefor the words"thirty percent";
• adding thefollowing new paragraph
• (ii)by immediately after subparagraph(3)-
• (4) The non-resident tax rates for repatriated income bya contractor undersection 7B shall befifteenper cent.

Amendment of the Eighth Scheduleto Cap

470.

Amendment of

the Ninth Schedule to Cap 470.

PARTIII-VALUEADDEDTAX

• 25.Section 2 of theValue Added Tax Act is amended in subsection(1)-
• (a)by deleting the definition of"assessment";
• bydeletingthe definitionofinformation
• (b) technology";
• (c) by deleting the definition of"taxcomputerized system".
• 26.Section 13 of the Value Added Tax Act is amended in subsection (6),by deleting paragraph (a)and substituting thereforthefollowingnewparagraph-
• (a)in the case of a supply of goods from a person licenced to carry on hire purchase business under ahire purchaseagreement registered accordance with the Hire Purchase Act, any financial charge payable in relation to the supply of credit under the agreement.
• 27.The Value Added Tax Act is amended by inserting the following new section immediately after section 17-

Adjustmentof supplies become

input tax after exempt.

• 17A.(1) Where,on the date taxable supplies by a registered personbecome exempt and theperson has deducted input tax on such supplies but the supplies remain unsold,the person shall accountfor an amount equal to the inputtaxrelatingto thesupplieswhich remain unsold in the taxreturn oftheperiodwhen the taxable supplybecame exempt.
• (2) When accounting for input tax under subsection (2),the person shall use the method usedwhen input taxwas deducted in respect of the supplies before the date the supplies became exempt.
• (3) Where the adjustment results in excess input tax,the person shall be liable to pay the resultingtax to the Commissioner.

Amendment of section 2 of Cap.

476.

Amendment of

section13of Cap. 476.

Cap.507

Insertion of a new

section17A1o Cap.476.

• 28.Section31 of theValueAdded TaxAct is amended in subsection (l),by deleting the words "two years" appearing in paragraph (a)immediately after the words "period of'and substituting therefor the words"three years".
• 29.Section 42 of theValue Added Tax Act is amended-
• (a) insubsection (1),by deleting the word "registered person"appearing immediately after theexpression "subsection (2). a and substituting therefor the word"person";
• (b)by deleting subsection (2) and substituting
• thereforthe followingnew subsection-—
• (2) An invoice showing an amount that purports to be
• tax shall only be issued in respect of a taxable supply.
• 30.The Value Added Tax Act is amended by repealing section 66.
• 31.Section A of theFirstSchedule to theValue Added Tax Act is amended-
• (a) in Part I-
• (i)
• by deletingparagraph 49;
• (ii)in paragraph 51-
• (A)by inserting the words "spare parts" immediately after the word"lubricants" appearing in paragraph 51;
• (B) by adding the following newproviso-

Provided that any exemption granted for spare parts before the 30" June 2026. shall apply until the conclusion on the

project.

• (ii) by deleting paragraph 58;

Amendment of section 31 of Cap.

476.

Amendment of section42of Cap

476.

Repeal of section

66 of Cap.476.

Amendment of First Schedule to Cap.476.

• (iv)by deleting paragraph 62;
• (v) by deleting the words "any other aircraft spare" appearing in paragraph 89 and substituting therefor the word"aircraft";
• (vi) by deleting the words "three hundred" appearing in paragraph 99(i) and substituting thereforethewords"two thousand";
• (vii) by deleting paragraph 109;
• (vii) by deleting paragraph 153;
• (ix)by inserting the following new paragraphs
• immediately afterparagraph 157-
• 158.Dialyzers of tariffnumber8421.29.00.
• 159.Scrap metal.
• 160.Inputs or raw materials locally theCabinet
• purchased or importedforthe manufacture of animal feeds upon recommendation by Secretary for the time being responsible for matters relating to agriculture.
• 161.Inputsor rawmaterialslocally purchased or imported forthe manufacture of pharmaceutical products uponrecommendationbythe Cabinet Secretary for the time being responsible for matters relating to health.
• 162.Transportation of sugarcane from farmstomillingfactories.
• 163.The supply of imported or locally
• purchased telephones for cellular networks and otherwirelessnetworks.

164. The supply of motorcycles of tariff 2. heading8711.60.00. 3. 165.The supply of electric bicycles. 4. 166.The supply of solar and lithium-ion batteries. 5. 167.The supply of electric buses of tariff 6. heading 87.02. 7. 168.Bioethanol vapour (BEV) Stoves plate 8. classified under HS Code 7321.12.00 (cooking appliances and warmersfor liquid fuel). 9. 169.Worn clothing and otherworn articles of tariff heading 6309,other than uponimportation. 10. 170.The supply of goods for the direct and exclusive use in the implementation of infrastructure projects undertaken under a public private partnership framework.upon approval by the Cabinet Secretary on the recommendation of the Cabinet Secretary for the Ministry responsible for the implementation oftheproject.

(b)in Part II-

• (i)in paragraph 1,by deleting subparagraph (b) and substituting therefor the following new subparagraph-
• (b) the issue,transfer,receipt or any other
• dealing with money,including money transfer services,and accepting over the counter payments of household bills,but does not include-
• (i) the services of carriage of cash, restocking of cash machines,sorting

or counting of money:and

• (ii) money transfers,payment processing,
• settlement, merchants acquiring, gateway or aggregation services suppliedover a software orplatform forafeeorcommissionbyapayment service provider;
• (ii) paragraph 25 is amended by inserting the following new definitions-

For the purposes of this paragraph-

"touroperator" means a tour or safari operator licensed as such by the competent authority responsible for regulatingand overseeing the tourism sector:and

"in-house supplies" means supplies made from a tour operator's own resources;or bought from third parties but materially alteredso thatthesupply madeis substantially differentto thatpurchased.

(ii)by deleting paragraph 26;

• (iv)by adding the following new paragraph immediately afterparagraph38-
• 39.The supply of services for the direct and exclusive use in the implementation of infrastructure projects undertaken under a public private partnership framework, upon approval by the Cabinet Secretary on the recommendation of the Cabinet Secretary for theMinistryresponsiblefor the implementation of the project.
• 32.The Second Schedule to the Value Added Tax Act
• is amended in Part A-
• (a) by deleting paragraph 11;

Amendment of Second Schedule

to Cap.476.

• (b) by deleting paragraph 21;
• (c)by deleting paragraph 29;
• (d) by deleting paragraph 30:
• (e) by deleting paragraph 31;
• (f)by deleting paragraph 32;
• (g)by deleting paragraph 33;
• (h) by deleting paragraph 34;
• (i) by deleting paragraph 35;

PARTIV-EXCISEDUTY

• 33.Section 2 of the Excise Duty Act is amended by
• inserting the following new definition inproper alphabetical sequence--

"antique,vintage or"classic vehiclemeans a motorvehiclewhoseyear offirstregistration is at least thirtyyears before the dateofpurchase of the motorvehicle and whosevalue is at least ten million shillings exclusive of depreciation.

• 34.Section 6 of the Excise Duty Act is amended by inserting the following new subsection immediately after subsection(4)-
• (4A)Despite subsections (1)and (4),the liability ofan importer or a licensedmanufacturer for excise duty on a locallypurchased or imported telephones for cellular networks and otherwireless networks shall arise at the time of the activation of the phone.
• (4B)TheCabinetSecretarymaymake regulations for the better carrying out of subsection (4A).
• 35.Section36 of the Excise Duty Act is amended-

Amendment of

Cap.472. thesection2of

Amendment of

section2of Cap 472

• (4A) Despite subsections (1) and (3),the excise duty payable inrespect of telephones for cellular networks and other wireless networksshall bepaid to the Commissioner by the timeofthe activation of the phone.
• (4B)TheCabinet Secretary may make regulations for the better carrying outof subsection
• (4A).
• 36.The First Schedule to the Excise Duty Act is
• amended-
• (a)in Part I,in the second table-
• (i) by deleting the description"imported cellular phones"and the corresponding rate of excise duty and substituting therefor the following new description and rate of excise duty-

Tariff Description Rate of excise duty

Telephones for cellular networks 25% of the excisable and other wireless networks of value. tariffheading8517.

• (i) by deleting the description"fruit juices (including grape must) and vegetable juice,unfermented and not containing added spirit,whether or not containing added sugar or other sweetening matter and the corresponding rate of excise duty;
• (il) in the description "bottled or similarly packaged waters and othernon-alcoholic beverages,not including fruitor vegetable juices",by deleting the words "bottled or similarly packaged waters and other"appearing immediately before the words"non-alcoholic beverages,not

Amendment of theFirstSchedule toCap.472.

including fruit or vegetable juices";

• (iv) in the description "Beer, Cider,Perry, Mead,Opaque beer and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of alcoholic strength not exceeding 6%",by deleting the proviso to the corresponding rate of excise duty;
• (V) in the description"spirits of undenatured extra neutral alcoholofalcoholic strength exceeding 90% purchased by licensed manufacturers ofspirituous beverages' by deleting the words "purchased by licensed manufacturers of spirituous beverages";
• (vi) in the description "cigars,cheroots, cigarillos,containing tobacco or tobacco substitutes" by deleting the corresponding rate of excise duty and substituting therefor the new rate of excisedutyof"Ksh.18,000 perkg";
• (vii) in the description "other manufactured tobacco and manufactured tobacco substitutes; "homogenous" and "reconstituted tobacco;tobacco extracts and essences" by deleting the corresponding rate of excise duty and substituting therefor the followingnew rate of excise duty"Ksh.12.550 perkg";
• (viii) in the description "Imported sugar confectionary of tariff heading 17.04"by deletingtheword"imported;
• (ix) by deleting the description"imported articles of plastic of tariff heading 3923.30.00and thecorresponding rate
• of excise duty;

• (x) in thedescription"imported ceramic sinks,wash basins,wash basin pedestals, baths,bidets,water closet pans,flushing cisterns,urinals and similar sanitary fixtures of tariff heading 6910"by deleting the corresponding rate of excise duty and substituting therefor the following new rate of excise duty-

"5% of the excisable value;

• (xi)
• by deleting the description "imported articlesof plasticof tariff heading 3923.30.00and3923.90.00andthe correspondingrate ofexcise duty;
• (xii) in the description of"Imported ceramic flags and paving,hearth or wall tiles; unglazed ceramic mosaic cubes and the like,whether or not on a backing: finishing ceramicsof tariff 6907by deleting the corresponding rate of excise duty and substituting therefor the following new rate of excise duty-

"5%of the excisable value";

• (xili) inthedescription "ImportedGlass bottles(excluding imported glass bottles for packaging of pharmaceutical products)",by deleting the proviso:
• in the description"Imported furniture of tariff heading 9403 excluding furniture originating from East African CommunityPartner States thatmeet the EastAfrican Community Rulesof Origin", by deleting the words "excluding those originating from East African Community Partner States that meettheEastAfrican Community Rules
• (xiv) of Origin";

• (xv) inthe description "Imported printed
• paper or paperboard of tariff heading 4811.41.90or4811.49.00butexcluding those originating from East African Community Partner States thatmeet the East African Community Rulesof Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";
• (xvi) in the description"Imported plates of plastic of tariff heading 3919.90.90 3920.10.90,3920.43.90,3920.62.90and 3921.19.90 but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";
• (xvii) in the description "Imported paper or paper board,labels of all kinds whether or not printed of tariff heading 4821.10.00 and 4821.90.00 but excluding those originating from East African Community Partner States that meet the EastAfrican Community Rules of Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the EastAfrican Community Rules of Origin";
• (xviii)in the descriptionImported printing ink oftariff 3215.11.00 and 3215.19.00 but excluding those originating from East African Community Partner States that

meet the EastAfrican Community Rules of Origin",by deleting the words"but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";

• (xix) in the description "Imported Float glass and surface ground or polished glass,in sheets,whether absorbent,reflecting or non-reflecting layer,butnot otherwiseworked of tariff 7005butexcluding thoseimportedbya registered processor upon the recommendation by the Cabinet Secretary responsible formatterrelating to industry and those originating from EastAfrican Community Partner States that meet the East African Community Rules of Origin,by deleting the words "and those originating from East African CommunityPartner States thatmeet the East African Community Rulesof
• (xx)
• Origin";
• in the description "Imported other selfadhesive plates,sheets,film,foil,tape, strip and other flat shapes.of plastics whether or notinrolls of tariffnumber 3919.90.90, but excluding those originating from East African Community Partner States thatmeet the EastAfrican Community Rulesof Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet theEast African Community Rules of Origin";
• (xxi) inthe description"Imported printed polymers of ethylene of other plates, sheets,film,foil and strip,of plastics,

noncellular and not reinforced, laminated, supported J0 similarly combinedwith othermaterialsof tariff number 3920.10.90.but excluding those originating from East African Community Partner States that meet the East African Community Rulesof Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";

(xxii) in the description "Imported printed polymers ofvinyl chloride containing by weight not less than 6% of other plates, sheets,film,foil and strip,of plastics, noncellular and not reinforced, laminated, supported or similarly combinedwith othermaterialsoftariff number3920.43.90,but excluding those originating from East African Community Partner States that meet the East African Community Rulesof Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";

• (xxiii) in the description "Imported printed poly (ethylene terephthalate) of polycarbonates,alkyd resins,polyallyl esters or other polyesters of other plates, sheets,film, foil and strip, of plastics, noncellular and not reinforced, laminated,supported or similarly of tariff number 3920.62.90,but excluding those originating gfromEast African Community Partner States thatmeet the EastAfrican Community Rulesof

Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";

• (xxiv)in the description Imported printed cellular of other plastics of other plates, sheets,film,foil and strip of tariff number 3921.19.90,but excluding those originating from East African Community Partner States that meet the EastAfrican Community Rulesof Origin",by deleting the words"but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";
• (xxv) in the description "Printed self-adhesive paper oftariffnumber 4811.41.90,but excluding those originating from East African Community Partner States that meet theEastAfrican Community Rules of Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";
• (xxvi) in the description Gummed paper and paperboardoftariffnumber 4811.49.00 but excluding those originating from East African Community Partner States thatmeet the East African Community Rules of Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";
• (xxvii) in the description "Imported Uncoated kraft paper and paperboard,in rolls or

sheets;kraftliner;unbleached of tariff number 4804.11.00but excluding those originating from East African Community Partner States that meet the East African Community Rulesof Origin",by deleting the words "but excluding those originating fromEast African Community Partner States that meet the East African Community Rules

of Origin";

• (xxviii) in the description "Imported other kraft paper or paperboard weighing 150g/m2 or less,in rolls or sheets;unbleached of tariff number 4804.31.00 but excluding those originating from East African CommunityPartner States thatmeet the EastAfrican Community Rulesof Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";
• (xxix) in the description "Imported other kraft paper orpaperboard weighing more than 150g/m2 but less than 225 g/m2,in rolls or sheets:unbleached of tariff number 4804.41.00 but excluding those originating from East African Community Partner States that meet the EastAfrican CommunityRulesof Origin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";
• (xxx) in the description "Imported other kraft ormore others inrolls or sheets; unbleachedof tariffnumber4804.51.00

but excluding those originating from EastAfrican Community Partner States that meet the East African Community Rules of Origin",by deleting the words "but excluding those originating from EastAfricanCommunity Partner States thatmeet the East African Community Rules of Origin";

(xxxi) in the descriptionImported Glass of heading 70.03,70.04 or 70.05, bent, edge-worked, engraved, drilled, enamelled or otherwise worked,but not framed or fitted with othermaterialsof Tariff Heading70.06,but excluding those from East Africa Community Partner States that meet the East Africa Community RulesofOrigin",by deleting the words "but excluding those originating from East African Community Partner States that meet the East African CommunityRulesof Origin";

(xxxii) in the description "Imported safety glass oftariffnumbers 7007.19.00and 7007.29.00 but excluding those originating from East African Community Partner States thatmeet the East African CommunityRulesof Origin",by deleting thewords "but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin";

• (xxxii)in the description "Imported Multiple walled insulating units of glass of Tariff Heading70.08,butexcluding thosefrom EastAfrica Community Partner States that meet the East Africa Community Rules of Origin",by deleting the words

"but excluding those originating from

East African Community Partner States that meet the East African Community Rules of Origin".

(xxxiv) in the description"spirits ofundenatured extra neutralalcoholofalcoholic strength exceeding 90% purchased by licensed manufacturers of spirituous beverages" by deleting the corresponding rate of excise duty and substituting therefor the following new rate of excise duty-

"kshs. 80 per litre"

(xxxv) by adding the following new tariff descriptions and corresponding rates of excise duty-

Tariff Description Rate of excise duty

Articlesofplasticof tariffheading10% 3923.30.00and3923.90.90

Coal

5%oftheexcisable value

Antique, vintage andclassic50% of the excisable vehicles value

Fruit juices (including grape must)Ksh. 14.14 per litre

and vegetable juice,unfermented and not containing added spirit.

Fruit juices (including grape must)Kshs.20 per litre

and vegetable juice,unfermented containing added sugar or other sweetening matter and not containing added spirit

(b) in Part II-

• (i)in paragraph 4A,by deleting the words"into
• a customer'sbetting wallet" appearing immediately after the word"deposited"and substituting therefor the words "for betting purposes"
• (ii) by deleting the proviso to paragraph 4A;
• (ii) in paragraph 4B,by deleting the wordsinto
• a customer's bettingwallet" appearing immediately after the word "deposited"and substituting therefor the words"for gambling purposes";
• (iv)by inserting the word"service"immediately before the word "providersappearingin paragraph 9:
• (c)in Part III-
• (i)bydeletingthedefinitionof"amount deposited into a customer'sbetting wallet;
• (ii) by inserting the following new definitions in proper alphabetical sequence-

"amount deposited"means the total value ofmoney ormoney'sworthpaid,transferred, credited,or otherwise made available for betting or gambling purposes to aperson who has been issued a licence under the Gambling Control Act,whether provided bya player or the operator,whetherin cash orcash equivalents,whether or not such amount is operatororlicensedperson,orconvertedinto chips,tokens,tickets,credits,or similar instruments;

"virtual asset"has the meaning assigned toitin section2 oftheVirtualAssetService

Providers Act,2025;

"virtual asset service provider"has the meaning assigned to it in section 2 of the

Virtual AssetServiceProvidersAct,2025.

No.20of 2025.No.20of 2025.

PARTV-TAXPROCEDURES

• 37.Section 3 of the Tax Procedures Act is amended in subsection (1)-
• (a) by deleting the definition of "certificateof
• origin;
• (b) by inserting the following new definition in
• proper alphabetical sequence-

"virtual asset" has the meaning assigned to it

in section 2 of the Virtual Asset Service ProvidersAct,2025;

"virtual asset service provider" has the meaningassigned to itinsection2of theVirtual Asset ServiceProviders Act,2025.

• 38.The Tax Procedures Act is amended by inserting the
• followingnew sections immediately after section 6B-

Virtual asset serviceprovidersto fileinformation

returns.

• 6C.(l) Each virtualasset service provider shall file an informationreturnwith the Commissioner in respect of all the virtual-asset users with which itmaintains a relationship in every calendaryear and that are identified as reportable users or as having controlling persons that are reportablepersons.
• (2) A virtual asset provider shall be required tofilethe informationreturn under subsection (l) if the virtual asset service provider provides a service thateffectuates exchange transactions ormakingavailablea trading platform on behalf of a customer, and includes acting as a counterparty,or as an intermediary, to the exchange transactions.
• (3)Apersonwho makesa false statement in an information return under subsection(l)commits an offence and shall

Amendment of section 3of Cap.469B

2025.No.20 of

No.20of 2025.

Insertion ofa new section 6C in Cap.469B

be liable on conviction toa fine of one

hundred thousand shillings for each false statement,or imprisonment for a term not exceeding threeyears,or toboth.

• (4) Aperson who omitsany information required to be includedin an information return under subsection (1),shall be liable to a penalty of one hundred thousand shillings for each omission.
• (5)A person shall not beliable under subsection (3) or(4) where theinformation required to be included in an information return under subsection (l) is in respect of another person and a reasonable effort was made by thepersontoobtain the informationfrom thatotherperson.
• (6)A virtual asset service provider that fails to file an information return or a"nil information return when required under subsection (l) shall be liable to pay a penalty of one million shillings for each failure.

Agreementsfor the automatic exchange virtual asset

• 6D.(1) Kenya may enter into an
• other countrieson automatic exchange ofinformation relating to transactions involving virtual assets.

transactions.

• (2) An agreement under subsection (1) shall provideforthe exchangeof information relating to-

2. (a)information returns filed under 3. section 6C(1). 4. (b) due diligence reporting and record keeping obligations prescribed under this section; 5. (c) the virtual asset users with which a virtual asset service provider 6. maintains a relationship in every

calendar year and thatare identified as reportable users or as having controlling persons that are reportable persons;

• (d)nil return filings by virtual asset
• service providers whodonot maintaina relationship with virtual asset users that are identified as reportable users or as having controlling persons that are reportable persons;and
• (e)arrangements or practices by virtual asset service providers, the main purpose or one of the main purposes of which can reasonably be considered to be to avoid obligations imposed under this Act.
• (5)In this section-

"information return"means a report,

settingoutprescribed information whicha reporting virtual-asset service provider is required tofilewith the Commissioner.

• (6) The Cabinet Secretary may make regulationsnecessaryforthe implementation

2. of this section. 3. 39.Section 10 of the Tax Procedures Act is amended 4. by inserting the following new subsections immediately after subsection(8)-

• (9) Where a person who was deregistered under this section qualifies for registration under section 8,the person shall apply tothe Commissioner for reinstatementof theregistration.

6. (l0) Where the Commissioner is satisfied that the applicant under subsection (9) is liable for tax under a tax law,the Commissioner shall register theperson and issue the person the same PIN that had been issued to thepersonprior to the deregistration.

Amendment of section1oof Cap.469B

• 40.Section 12 of the Tax Procedures Act is amended by insertingthe following new subsection immediately after subsection(5A)-
• (5B) A non-resident person shall be exempt from therequirement of a PiNwhen opening an account with
• an investmentbank.
• 41.The Tax Procedures Act is amended by inserting the
• followingnewsectionimmediately aftersection18-

Tax avoidance

schemes.

Cap.470.Cap.470.

Cap.469.469

18A.(1)WheretheCommissioner determines ina accordancewiththe information obtained under subsection (2) that-

• (a)a person has entered into or carried
• out a tax avoidance scheme;
• (b)aperson has obtained a taxbenefit in connection with the scheme:and
• (c) the purpose of enabling the person referred to in paragraph (b) is to obtain a tax benefit,

the Commissioner may determine the tax liabilityofthe person who obtained the tax benefit as if theschemehad notbeen entered

into orcarried out.

• (2)The Commissioner shall rely on-
• (a)information submitted tothe Commissioner under section 35(5)of the Income Tax Act:
• (b) the accounting of tax deducted under section 37(1) of the Income Tax Act;
• (c)information submitted tothe Commissioner under section 5A of the Kenya Revenue Authority Act;

Amendment of section12of

Cap.469B.

Insertion ofnew section I8Ato

Cap469B.

• (d)information submitted through the electronic system established under
• section 23A:
• (e)information submitted to the Commissionerunder section24A:
• (information obtained from the inspection of goods and records
• conducted under section58;
• (g)information obtainedfromthe auditing of the records produced under section59:or
• (h) information submitted to the data management and reporting system established under section 59A:or
• iinformation submitted to the Commissioner underany other written law,to makea determination under subsection (l).
• (3) The Commissioner shall issue to the person referred to in subsection (l) (b) an assessmentof the tax liability determined under subsection (l) within five years from thelast day ofthe taxperiod to which the tax liabilityrelates.
• (4)In this section-

"scheme"includes a course of action, and an agreement,arrangement,promise, plan,proposal,or undertaking,whether express or implied,and whether or not legally enforceable:and

"tax benefit"means-

• (a)a reduction in the liability of a person to pay tax;

• (b) an increase in the entitlement ofa person to a deductionfor input tax;
• (c)an entitlement to arefund;
• (d)a postponementofa liability for the payment of tax;
• (e)an acceleration of an entitlement to a
• deduction for input tax;
• (f) any other advantage arising because ofa delayinpayment of tax or an acceleration of the entitlement toa deduction for input tax;
• (g)anything that causes a taxable supply or taxableimportnottobea taxable supply or taxable import,as the case may be:or
• (h)anything that givesrisetoa deduction for input tax for an acquisition or import that is used or is intended to be used other than in making taxable supplies.
• 42.The Tax Procedures Act is amended by inserting the
• following new section immediately after section 29-

Commissioner 29A.(1)TheCommissioner may,in to issue an accordance with the information obtained in assessment. accordancewith subsection (2),issue an assessment on the income of a person as he may deem necessary.

• (2)The Commissioner shall rely on-
• (a) theinformation submittedtothe Commissioner under section 35(5):
• (b) the accounting of tax deducted under

Insertion ofa

new section 29Aof Cap. 469B.

Cap.469

Cap.469B.

section 37(1);

• (c) theinformation submitted tothe Commissioner under section 5A of the Kenya Revenue Authority Act;
• (d) the information
• submittedtothe electronic system established under section 23Aof theTaxProceduresAct;
• (e) the informationsubmitted tothe
• Commissioner under section 24A;
• (f)theinformation obtainedfrom the inspectionofgoodsand records conducted under section58;
• (g)the information obtained from the auditingof therecords produced under section 59;
• (h) the information submitted to the data
• managementand reportingsystem established under section59A:or
• (i) theinformation submitted tothe
• Commissioner under written law,

to issue an assessment under subsection (1).

• 43.Section 37Eof the Tax Procedures Act is
• amended-
• (a) in subsection (l),by deleting the expression "31"December,2023"appearing immediately after the words"due before the"and substituting therefor the expression"31December,2025";
• (b) in subsection (2),by deleting the expression "31"December,2023"appearingimmediately afterthewords"paidbeforet the' and substitutingtherefortheexpression "31s" December,2025";

Amendment ofsection37E

of Cap.469B

• (c)in subsection (3)-
• (i) in paragraph (a),by deleting the expression substituting therefor the expression "31"
• "31" December, 2023" appearing immediately after thewords"up to the"and December.2025";
• (ii) in paragraph (b),by deleting the expression and "31"
• "30June,2025" appearing immediately after the words "later than the substituting therefor the expression December,2026";
• (d) in subsection (4)-
• (i)by deleting the expression "31"December, 2023" appearingimmediately after the words"as on the"and substituting therefor theexpression"31"December,2025";
• (ii) by deleting the expression "30" June,2025"
• appearing immediately after the words "unpaid on the"and substituting therefor the expression"31"December,2026".
• 44.Section 39A of the Tax Procedures Act is amended
• by deleting subsection (2).
• 45.Section 42 of theTaxProcedures Act is amended in subsection (14),by deleting paragraph (e).
• 46.The Tax Procedures Act is amended by repealing
• section 44A.
• 47.Section 47 of theTaxProcedures Act is amended in subsection (1),by deleting the words"and value added tax payable on imports"appearing in paragraph (a).
• 48.Section 75 of the Tax Procedures Act is amended by adding the following new section immediately after subsection (2)-

Amendment ofsection39A

ofCap.469B.

Amendment ofsection42 ofCap.469B.

Repeal of section44Aof Cap.469B.

Amendment ofsection 47

to Cap.469B.

Amendment of section 73 of Cap.469B.

• (3) The Commissioner may use the information technology contemplated under subsection (l) to generate a prepopulated taxreturn onbehalfof aperson required tosubmitorlodgea taxreturn.
• (4) A person required to submit or lodge a tax returnmayrelyontheprepopulated returngenerated by the Commissioner under subsection (3) to submit or lodge the return.
• 49.Section 77 of the Tax Procedures Act is amended
• by deleting subsection (2).
• 50.The Tax Procedures Act is amended by repealing
• section 86 and replacing it with the following new section-

Failure tocomply

with electronic tax system.

• 86.(1)WheretheCommissioner
• determines that a taxpayer has failed to complywiththerequirementundera taxlaw to issue an electronic tax invoice,submit a tax return in electronic form,or pay tax electronically pursuant to section 75,the Commissioner shall issue a notice in writing to the taxpayer requiring the taxpayer to providereasonsfor the non-compliance.
• (2) Upon receipt of the response of the taxpayer as required under subsection (1),
• the Commissioner shall consider whether-
• (a) the failure to comply arose from
• circumstances beyond thereasonable control of the taxpayer;
• (b) the failure to comply wasnot due to the wilful neglect or deliberate default of the taxpayer;and
• (c) the taxpayer tookreasonable steps to comply with the relevant requirementas soonaspracticable.

Amendment of section77of Cap.469B

and replacementof section86of

Repeal Cap.469B

• (3) Where the Commissioner is not satisfied by the reasons given under

2. subsection(2),the taxpayer shall be liable to pay the higher of the followingpenalties- 3. (a) two times the value of the tax due; 4. (b)one hundred thousand shillings;or 5. (c) in the case of an individual,ten thousand shillings. 6. 51.Section89 of the TaxProceduresAct is amended- 7. (a)in subsection(5A)-— 8. (i)in paragraph (c),by deleting the words"due to a malfunctionof an electronic tax system" appearing immediatelyafter theword "interest"; 9. (ii) by inserting the following new paragraph 10. immediately after paragraph (c)- 11. (ca) a malfunction of an electronic tax system; 12. (b) by inserting the following new subsection 13. immediately after subsection(5A)- 14. (5B) Despite subsection (5A),thc Commissioner may waive thewhole orpart of any penalty or interest imposed under this Act where theliability topay thepenaltyorinterest does not exceed two million shillings and was due to an error generated by an electronic tax system. 15. 52.Section 112 of the Tax Procedures Act is amended 16. in subsection (2) by inserting the following new paragraph immediately afterparagraph(b)- 17. (ba) the procedure for the submission or lodging of 18. returns based on prepopulated tax returns

Amendment of section 89 of Cap. 469B

Amendmentto section112of Cap.469B

generated by the Commissioner.

PARTVI-MISCELLANEOUSFEESANDLEVIES

• 53.Section 7 of the Miscellaneous Fees and Levies Act
• is amended-
• (a) in subsection (6),by deleting the words "twenty percent" appearing immediatelyafterthe expression"subsection (2)"and substituting therefor the words"ten percent";
• (b) in subsection (7),by deleting the words "while ten percent shall be used for revenue enforcementinitiativesappearing immediately after the word"obligation"
• 54.Section 9 of the Miscellaneous Fees and Levies Act is amended by deleting the wordsimport declaration fee, railway development levy and export levy" appearing immediately after the words"payment of' and substituting therefor the words"the fees and levies imposed under Part III".
• 55.The Second Schedule to the Miscellaneous Fees and Levies Act is amended-
• (a)in Part A-
• (i)by deleting paragraph (xv) and substituting thereforthefollowingnewparagraph-
• (xv) all parts ofchapter 88 and goods of tariff heading 8802.30.00 and

8802.40.00:

• (ii)by inserting the following new paragraph immediately after paragraph(xxxii)-

(xxxiii)imported telephones for cellular networks and other wireless

networks:

(b) in Part B- Amendment of section7of Cap.469C

Amendment of section9of Cap 469C

Amendment of

469C

the Second Schedule to Cap

• (i)by deleting paragraph(xii) and substituting
• thereforthefollowingnewparagraph-
• (xili) all parts of chapter 88 and goods of tariff heading 8802.30.00
• and 8802.40.00:
• (ii) by inserting the following new paragraph immediately after paragraph(xviii)-
• (xix) imported telephones for cellular networks and other wireless
• networks.

PARTVII-STAMPDUTY

• 56.Section 96Aof theStamp Duty Act isamended in subsection (l) by adding the following new paragraph immediately afterparagraph(b)-
• (c) that the effect thereof is to convey or transfer a beneficial interest in property from a person or persons to thereal estate investment trust.

PARTVIII-ROADMAINTENANCE

• 57.Section 3of theRoad MaintenanceLevy Fund Act is amended in subsection(2) by deleting the words"three shillings"and substituting therefor the words"one shilling and fifty cents.

Amendment to section96Aof Cap.480.

Amendment of

secion3of Cap 427

MEMORANDUMOFOBJECTSANDREASONS

The Finance Bill,2026,has been submitted by the Cabinet Secretary for the National Treasury and formulates proposals relating to revenue

raisingmeasures including liability to,and collection of taxes.

The Bill proposes to amend the Income Tax Act (Cap. 470), the

Value Added TaxAct(Cap.476).the Excise Duty Act (Cap.472).the Tax Procedures Act (Cap.469B),the Miscellaneous Fees and Levies Act (Cap. 469C) and theStampDuty Act (Cap.480).

The Bill also amends the Road Maintenance Levy Fund Act,(Cap. 427) toreduce the amountpayableinto the Road Annuity Fund from three shillings to one shilling and fifty cents.

Dated the5thMay.2026.

HON.KURIAKIMANIMP,

Chairperson, Finance andNational Planning Committee.

Section 2 of Cap.470which it isproposed to amend-

Interpretation

"immovable property"includes-

• (a) land,whether covered by water or not,any estate,rights,interest or easement in or over an land and things attached to the earth or permanently fastened to anything attached to the earth,and includes a
• debt secured by mortgage or charge on immovable property:and
• (b) a mining right,an interest in a petroleum agreement,mining informationorpetroleum information:

"management or professional fee"means any payment made to any person, other than a paymentmadeto an employee by hisemployer,asconsiderationfor any managerial,technical,agency.contractual.professional or consultancy serviceshowever calculated:

"royalty"means a payment made as a consideration for the use or the right

to use-

• (a)
• any copyright of a literary,artistic or scientificwork:
• (b) any software,proprietary or off-the-shelf,whether in the form of licence,development,training,maintenance or supportfees;
• (C) any cinematograph film,including a film or tape for radio or
• television broadcasting;
• any patent,trademark.design or model,plan,formula or process;
• (d)
• (e) any industrial,commercial or scientificequipment:or
• (f) information concerning industrial.commercial or scientificequipment or experience,and any gains derived from the sale or exchange of any
• right or property giving rise to that royalty:

"withdrawals"means the amountofmoneywithdrawn bya customer from their betting or gaming wallet maintained by a person licensed under the Betting, Lotteries and Gaming Act:

Section5ofCap.470,whichitisproposed toamend-

Income from employment,etc

• (1)For the purposes of section 3(2)(a)(ii) of this Act,an amount paid to-
• (a) a person who is,or was at the time of the employment or when the employment or servicesrendered by him inKenya or outsideKenya; or
• (b) a non-residentperson in respect ofany employment with or services rendered to an employer who isresidentinKenya or the permanent establishmentinKenya ofan employerwho isnotsoresident,shall be deemed to have accruedin or tohavebeen derivedfromKenya.

• (2)For the purposesof section 3(2)(a)(ii)"gains or profits"includes-
• (a)any wages,salary,leave pay.sick pay.payment in lieu of leave,fees, commission,bonus,gratuity,or subsistence,travelling,entertainment or other allowance received in respect of employment or services rendered,and any amount so received in respect of employment or servicesrenderedin ayearofincome other than theyear ofincome in which it isreceived shall bedeemed tobeincome in respect of that otheryearofincome:

Provided that-

• (i) whereanysuch amount isreceived inrespect ofayear ofincome which expired earlier than fouryearspriorto theyear of income in whichitwasreceived,orprior to theyearof income inwhich the employment or services ceased.if earlier,it shall be deemed tobe incomeof theyearof income which expired fiveyears prior to theyearofimcome inwhich it wasreceived,orprior to theyear ofincome inwhich the employmentorservicesceased as the case may be:and
• (ii) where the Commissioner is satisfied that subsistence.travelling reimbursementto therecipientofan amount expended byhim wholly and exclusively in theproduction ofhis income from the employment or services rendered then the calculation of the gains or profits ofthe recipient shall exclude that allowance or expenditure;
• (ii)notwithstanding the provisions of subparagraph (ii),where such travelling,entertainment or other allowance,in respect of a period spent outside hisusual place of work while on official duties,the first ten thousand shillings per day expended by him for the duration of that period shall be deemed to be reimbursementoftheamount so expended and shall be excluded in the calculation of his gains or profits:and
• (iv)notwithstanding the provisions of subparagraph (ii),where such
• an amount isreceived by an employee as paymentof travelling allowance to perform official duties,the standard mileage rate approved by the Automobile Association of Kenya shall be deemed to bereimbursement of the amount so expended and shall be excluded in the calculation of the employee's gains and profits;
• (b) save as otherwise expressly provided in this section,the value of a benefit,advantage,or facility of whatsoever nature the aggregate value whereof is not less than sixty thousand shillings granted in respect ofemployment orservicesrendered;

• (C) an amount received as compensation for the termination of a contract of employment or service,whether or not provision is made in the contractfor thepaymentofthatcompensation:

Provided that,except in the case of a director,other than a whole time service director.of a company the directors whereof have a controlling

interest therein-

• (i) where the contract is for a specified term,any amount received as compensation on the termination of the contract shall be deemed to have accrued evenly over the unexpired period of the contract;
• (i where the contract is for an unspecified term and provides for compensation on the termination thereof,the compensation shall be deemed to have accruedin theperiodimmediately following the termination at a rate equal to the rateper annum of thegains or profits from the contract received immediately prior to termination:
• ii where the contract is for an unspecified term and does not provide for compensation on the termination thereof,any compensation paid on the termination of the contract shall be deemed to have accruedevenlyin the threeyears immediately following such termination:
• anybalancing charge underPart ll of the Second Schedule:
• (d)
• (e) the value ofpremises provided by an employer for occupation by his employee forresidential purposes:
• (f) an amountpaid by an employer as a premium for an insurance on the life ofhis employee andfor thebenefit of that employee orany of his dependants:

Provided that this paragraph shall not apply where such an amount is

paid-

• (i) to a registered or unregistered pension scheme,pension fund,or individualretirementfund;or
• for group life policy cover,unlesssuch a cover confers a benefit to the employee or anyofhis dependants.
• (fa)club entrance and subscription fees allowed against the employer's income;
• (2A) (a) Where an individual is a director or an employee or is a relative of a director or an employee and hasreceived a loan including a loan from an unregisteredpension orprovidentfund byvirtue ofhisposition asa director or his employment,or theperson to whom he is related,he shall be deemed to have received abenefitin thatyear ofincome equal to thegreaterof-

• (i) the difference between the interest that would have been payableon theloanreceived ifcalculated attheprescribedrateofinterest and the actual interestpaid on theloan;and
• (ii) zero:

Provided thatwhere the term of the loan extendsfor a period beyond the date of termination of employment,the provisions of this subsection shall continue to apply for as long as the loan remains unpaid.

• (b) For the purposes of this subsection-

"employee" means any person who is not a beneficial owner of or able

either directly or indirectly or through themedium ofother companies or by any other means to control more than five per cent of the share capital or voting power ofthat company;

"market lending rates"means the average 9l-day treasury bill rate of interestfor the previous quarter:

"prescribed rate of interest"means the following:

• (i) in theyear ofincome commencingon the 1st January.1990.6per
• cent,
• (ii) in the year of income commencing on the 1st January.1991.8 per
• cent:
• (i) in the year of income commencing on the 1st January.1992,10 per cent:
• (iv) in the year of income commencing on the 1st January.1993,12 per
• cent;
• (V) in the year ofincome commencing on the 1st January,1994,15 per cent:and
• (vi) in the year of income commencing on or after the Ist January.1995, Commissioner may from time to time prescribe,to cover a period of not less than six months but not more than one year.whichever is the
• lower.

"relative of a director or an employee"means-

• (i)his spouse:
• (i) his son,daughter,brother,sister,uncle.aunt,nephew,niece, stepfather,step-mother,step-child.or in the case of an adopted child his adopter or adopters:or
• (ii) the spouse of any such relative as is mentioned in subparagraph (ii).

• (2B)Where an employeeis providedwith a motorvehicle byhisemployer, he shall be deemed to havereceived a benefitin thatyear ofincome equal to the higher of-
• (a) such value as the Commissioner may,from time to time.determine:
• (b)
• and
• the prescribed rate ofbenefit:

Provided that-

• (i) where suchvehicle ishired or leased from a thirdparty,the employee shall be deemed to have received a benefit in thatyear of income
• equal to thecost ofhiringor leasing;or
• (i) where an employee has restricted use of such motor vehicle,the Commissioner shall,if satisfied of that fact upon proof by the employee,determine a lower rate of benefit depending on the usage of the motorvehicle.
• (2C)For the purposes of subsection(2B)-

"prescribed rate of benefit"means the following rates in respect of each

month-

• (a) in the1996yearofincome,1%of the initial capital expenditureon the vehicle by the employer;
• (b) in the1997yearofincome,1.5%of theinitialcapital expenditure on
• thevehicle by the employer;and
• (c) in 1998 and subsequentyearsofincome,2%oftheinitial expenditure on thevehicle by the employer.
• (3) For the purposes of subsection (2)(e),the value of premises,excluding thevalue of anyfurniture orother contents soprovided,shall be deemed to be-
• (a)in the case of a director of a company.other than a whole time service director,an amountequal to the higher of fifteen per centum ofhis total income excluding the value of those premisesand income which is chargeable under section 3(2)(f),the market rental value and the
• rentpaid by the employer;
• (b) in the case of a whole time service director,an amount equal to the higher of fifteen per centum of the gains or profits from his employment,excluding the value of those premises,and income which is chargeable under section 3(2)(f),the market rental value and
• the rent paid by the employer;
• (C) in the case of an agricultural employee required by the terms of employment to resideon a plantation or farm,an amount equal to ten per centum of the gainsor profitsfrom his employment:

Provided thatfor thepurposes of this paragraph-

• (i)plantationshall not include a forest or timber plantation;and

• (i)agricultural employee" shall not include a director other than a
• wholetimeservice director:
• (d)in the case of any other employee,an amount equal to fifteen per centum of the gains or profits from his employment,excluding the valueof thosepremisesor therentpaidby the employerifpaid under an agreement made at arm's length with a third party,whichever is the higher:

Provided that-

• (i) where the premises are provided under an agreement with a third party which is not at arm's length,the value of the premises determinedunder thissubsection shall bethe fairmarketrental value of the premises in that year.or the rent paid by the employer,whichever is the higher:or
• (ii) where the premises are owned by the employer,the fair market
• rental value of the premises in thatyear:

Provided that-

• (i) where a person occupies premises for part only of a year of income,the value ascertained under the foregoing provisions shall bereduced by that proportion which isjust andreasonable havingregard to theperiod ofoccupation and theyearlyrate of gains orprofitsfrom employment;
• (ii) where the employee pays rent to his employer forpremises,the value ascertained under the foregoing provisions shall be reduced by the amountofrent;
• (ii)where part only of any premises is so provided,the Commissioner may reduce the value ascertained under the foregoing provisions to the amount which he considers just and reasonable:
• (iv) where the gains or profits from a persons employment, excluding thevalue of thepremisesprovided by the employer, exceed six hundred thousand shillings in the year,the value of the premises determined under this subsection shall be subject to
• the limitof-
• (a)t therentpaid by theemployer or the fairmarketrental value of the premises in that year where the premises are provided under an agreement with a third party which is not at arm's length,whichever is
• the higher;or
• (b)the fair market rental value of the premises in that year where the premises are owned by the employer.
• (4) Notwithstanding anything to the contrary in subsection (2)"gains or profits"do not include-

• (a) the expenditure on passages between Kenya and any place outside Kenyaborne by employer:

Provided that thisparagraph shall not apply to expenditure other than expenditure on the provision of passages for the benefit of an employee recruited or engaged outside Kenya and who isin Kenya solely for thepurposeofserving the employer and isnot a citizen of Kenya:

• (aa) expenditure on vacation trips to destinations in Kenya paid by the employer onbehalfof an employee:

Provided that-

• thisparagraph shall cease to apply on the 1st July,2015;
• i)
• the period of vacation shall not exceed seven days; and
• (ii)
• (ii) the termemployee"shall include the immediate family
• members of the employee:
• (b) in the case of a full-time employee or his beneficiaries (which expression includes a whole time service director,or a director who controlsmore than five per cent of the share capital or voting power of a company) the value of any medical services provided by the employer or medical insurance provided by an insurance provider employeron behalfof a full-time employee or hisbeneficiaries:

Provided thatin the case ofa directorother than a whole time service director,the value of the services shall be subject to such limit as the Cabinet Secretarymay.from time to time,prescribe;

• (c) an amountpaid by the employer as a contribution to a registered or unregistered pension fund,provident fund,individual retirement fund or scheme:

Provided that this paragraph shall not apply to any contributions paid

by an employerwho isnot aperson chargeable to tax-

• (i) to an unregistered pension scheme,unregistered provident fund or unregistered individual retirementfund;or
• (ii) to a registered pension scheme.a registered provident fund ora registered individual retirement fund in excess of the amount specified in section 22A or22B;
• (d) educational fees of employee's dependants or relatives disallowed under section 16(2(a)(iv) which have been taxed in the hands of the employer,
• (e)
• fringe benefits subject to tax under section 12B;
• (f) the first sixty thousand shillings on the value ofmeals served by the employer,whether the meals are supplied by the employer or not,

within hispremises to employees in a canteen or cafeteria operated or establishedby the employer or providedby a third party who isa registered taxpayer,whether the meals are supplied in the premises of the employer or the premises of the third party,shall be excluded in the calculation of his gains or profits subject to such conditions as the Commissioner may specify:

• (fa)any amount paid or granted to a public officer pursuant to any written law or statutory instrument,with effect from 27th July,2022.to reimburse an expenditure incurred for the purpose of performing official duties,notwithstanding the ownership or control of any assets purchased;
• (g) an amount paid by an employer asa gratuity or similarpayment in respect of employment or services rendered,which is paid into a registeredpensionscheme:

Provided that-

• (a) this paragraph shall only apply in respect of amounts not exceeding threehundred andsixty thousand shillingsforeachyear ofservice:
• (b) this paragraph shall not apply to any person who is eligible for deductionsundersection 22A.
• (h) For the purposes of this subsection-
• (i) "beneficiaries"means the full time employee's spouse and not more than four children whose age shall not exceed twenty-oneyears:and
• (5)Notwithstanding any other provision of this Act. the value of the benefit(excluding the value ofpremises as determined under subsection (3) and the value of benefit determined under subsection (2B) for the purposes of this section,shall be thehigher of the costto the employer or thefairmarketvalue of the benefit:

Provided that-

• (a) in the case of an employee share ownership plan,the value of the benefit shall be the difference between the offer price,per share,at the date the option is granted by the employer,and the market value.per share on the date when the employee exercises the option;
• (b) the Commissioner may,from time to time,prescribe the value where thecostor thefairmarketvalueof abenefitcannotbedetermined.
• (6) For the purposes of paragraph (a) of the proviso to subsection (5)-
• (a) the benefits chargeable shali be deemed to have accrued on the date the employee exercisesthe option;
• (b) "offer price"means the price at which an employer's shares are initially offered to an employee under an employee share ownership plan:

• (c)
• "market value",in relation to a share means-
• (i) where the shares are fully listed on any securities exchange operating in Kenya,themid-marketvalue on the date the option was exercised by the employee;or
• (ii) where the shares are not fully listed,the price which the shares might reasonably be expected to fetch on sale in the open market,when the option is exercised;
• (d) to purchase a fixed number of shares at a fixed price,which may be paid for at the end of the vesting period:
• (e) offerby the employer and the dateafterwhich the option topurchase canbe exercised by the employee.
• (7) Where an employee is offered company shares in lieu of cash emoluments by an eligible start up.the taxation of the benefit from the shares allocated to that person byvirtue ofemployment shall be deferred and taxed within thirty days of the earlier of-
• (a) the expiry offiveyears from the end of theyear of the award of the
• shares;
• (b) the disposal of the shares by the employee;or
• (C)
• the date the employee ceases to be an employee of the eligible startup:

Provided that-

• (i this subsection shall not apply to any cash emoluments or other benefits in kind offered to an employee by virtue of the employment;
• (i the benefit shall be deemed to accrue at the earlier of the occurrence of the events contemplated in paragraphs(a),(b) or (c):
• (ii)thevalueof the taxablebenefit shall be the fairmarket value of the shares at the earlier of the occurrence of the events contemplated in paragraphs(a),(b) or(c);or
• (iv)where the fair market value is not available,the Commissioner shall determine the value of the shares based on the last issued
• financial statements.
• (8)For the purposes of subsection (7),"eligible start-up company"means a businessincorporated inKenya that-
• (a) has an annual turnover of not more than one hundred million shillings;
• (b) does not carry on management,professional or training business;

• (C) has not been formed as a result of splitting or restructuring of an existing entity;and
• (d) hasbeen in existence foraperiod ofnot more than fiveyears.

Section8of Cap.470.which it isproposed to amend-

Incomefrom pensions,etc

• (1)For the purposes of section 3(2)(c)of this Act.any pension received by a residentindividual from a pension fund orpension scheme established outside Kenya shall bedeemed tohave accruedinor tohavebeen derivedfromKenya to the extent to which it relates to employment or services rendered by the individual,or the spouse orparent of the individual.in Kenya and the amount so derived shall be the proportion of the total pension which the length of the employment or services in Kenya,including periods of leave earned thereby, bears to the total length of employment or services in respect of which the pension is paid.
• (2) For the purposes of this Act any pension or retirement annuity received by a non-resident individual from a pension fund or pension scheme established in Kenya or under an annuity c (3) For the purposes of this Act,any pension received in respect ofemploymentby or services rendered to the Community or one of its corporations shall be deemed to have accrued in or to have been derived fromKenya-
• (a) ifreceived by aresident individual:or
• (b) ifreceived by a non-resident individual if the person making payment of the pension was resident inKenya.
• (5A) For the purposes of subsection 5(c)(ii).accumulated funds are segregated where-
• (a) the accumulated fundsbased on contributions prior to the Ist January 1991 are accounted for separately from contributions after 3lst December,1990:and
• (b) the net accumulated funds on each account earn the average rate of return on all the assetsin the fund at the accounting date for a year of income:and
• (C) the net accumulated funds based on contributionsprior to IstJanuary. 1991,are made up of the accumulated balances as at 3lst December, 1990.lessany withdrawals from thefund plus anyinvestmentincome earnedon thefundup totheaccountingdateforayearofincome.
• (8)Upon dissolution of the marriage of the beneficiary of a registered individual retirement fund,or registered home ownership savingsplan,as part of a writtenagreement,all orpart of thebalance of funds of thatbeneficiarymay be transferred to a registered individual retirement fund or registered house ownership savingsplan,in thename of theformer spouse of thatbeneficiary.

(10)For the purposes of thissubsection-

• (a) pension and lumpsums paid from a public pension scheme,shall be deemed to bereceived from a registered pension fund or a registered provident fund,as the case may be:
• (b) any surplus funds in respect of a registered pension fund or a registered provident fund withdrawnby or refunded to an employer shall be deemed tobe theincome of that employer.
• (11) In subsection(IO),the expression"surplus funds"means surplus funds identified through an actuarialvaluation carried out in accordancewith this Act or any rulesmade thereunder contract made in Kenya shall be deemed to have accruedin or to havebeen derivedfromKenya.

Section9of Cap.470,which it isproposed toamend

Income of certain non-residentpersons deemed derived from Kenya

• (1) Where a non-resident person carries on the business of shipowner, charterer or air transport operator and any ship or aircraft owned or chartered by him calls at any port or airport in Kenya.the gains or profits from such business from the carriage of passengers who embark.or cargo or mail which is embarked.in Kenya shall be the gross amount received on account of the carriage and those gainsorprofits shall be deemed to be income derived from Kenya:but this subsection shall not apply to gains orprofits from the carriage of passengers who embark,or cargo or mail which is embarked,in Kenya solely as a resultof transhipment.

Provided that all income ofa non-resident shipping line including income from delay in taking delivery ofgoods or returning any of theequipment used for transportation ofgoods shall be deemed tobe income derivedfromKenya.

• (2) Where a non-resident person carries on.in Kenya,the business of transmitting messagesby cable.radio.optical fibre,televisionbroadcasting,Very Small Aperture Terminal (VSAT).internet,satellite or by any other similar method of communication,then the gainsorprofitsfrom thebusiness shall be the gross amountreceived for the transmission ofmessageswhich are transmitted by the apparatus established in or outside Kenya.whether or not those messages originate fromKenya.and such gains and profits shall be deemed to be income derived from Kenya.
• (3) Where a resident person enters into a financial derivatives contract with a non-resident person,any gain accruing to the non-resident person from that arrangement shall be subject to taxat therate specified in theThird Schedule.
• (4) The provisions of subsection(3) shall be carried out in accordance with

4. Regulationsmadeby the CabinetSecretary.

Section10ofCap470,which ii isproposed toamend-

Incomefrommanagementorprofessional fees,royalties,interestand rents

• (1) For the purposes of this Act,where a resident person or a person having a permanent establishment in Kenya makes a payment to any other person in respectof-

• (a) a management orprofessional fee or training fee:
• (b)
• a royalty or natural resource income;
• (c) interest and deemed interest:
• (d)
• the use ofproperty;
• (e) an appearance at,or performance in,any place (whether public or private) for the purpose ofentertaining,instructing.taking part in any sporting event or otherwise diverting an audience:or
• f) an activitybyway ofsupporting,assisting or arrangingan appearance orperformance referred to in paragraph (e) of this section;
• (g) withdrawals;
• j an insuranceorreinsurance premium;
• (k) sales promotion,marketing,advertising services.and transportation of goods(excluding air and shipping transport services:
• supplyofgoods to apublicentity:
• (m) making orfacilitating payment over a digital marketplace:

theamount thereofshall be deemed to beincomewhich accruedin or was derived from Kenya:

Provided that-

• this subsection shall not apply unless the payment is incurred in theproduction ofincomeaccruedinorderived fromKenya orin connexion with a business carried on or to be carried on,in whole or in part.in Kenya:
• (ii) this subsection shall not apply to any such payment made,or purported to be made.by the permanent establishment in Kenya ofa non-resident person to that non-resident person except for deductionsprovided for by agreements under section 41:
• (ii) for the avoidance of doubt.the expression"non-resident person" shall include both head office and other offices of the nonresident person.
• (2) A net gain referred to in section 3(2)(g) is deemed to be income that accrued in or was derived from Kenya.
• (3)Where a payment has been made to a non-resident person,withholding tax paid thereon shall not berefundable or available for deduction against the incomewhere an audit adjustment hasbeen madein respect of suchpayment.
• (4) Where a resident or a non-resident person,being the owner or operator ofa digital marketplace or platform,makes or facilitates payment in respect of digital content monetisation,property or services,the amount thereof shall be deemed to be income which accrued in orwas derived from Kenya.

• (5)In this section,"platformmeans a digital platform or website that facilitates the exchange of a short-term engagement,freelance or provision of a service,between a service provider,who is an independent contractor or freelancer,and a clientor customer.

Section 11ofCap.470,whichiiisproposed-

Trust income,etc.,deemed income of trustee,beneficiary,etc.

• (1) Any income chargeable to tax under this Act and received by any person in his capacity as a trustee,executor or administrator,shall be deemed to be income of that trustee,executor or administrator as the case may be.

2. (2) Wherean amount included in the income of the trustee,executor or administrator under subsection(l) consists ofqualifying dividends or qualifying interest.thatamount shall be deemed to be an amount chargeable to tax under section 3(2)(b)and not section 3(2)(e). 3. (3) Any amount,received as income in a year of income by any person beneficially entitled thereto from any trustee in his capacity as such,or paid out of income by the trustee on behalf of such person,shall,subject to this Act,be deemed to be income ofsuch,and to the extent that any such amount isreceived or so paid out ofincome chargeable to tax under this Acton that trustee it shall bedeemed tobeincome- 4. (a) in any case other than that of an annuity directed to be paid free of 5. tax- 6. (i) 7. ofsuch gross amount as would,after deduction of tax at the rate paid or payable on such income by such trustee,be equal to the amount received or so paid;and 8. (ii)that has borne tax at such rate; 9. (b) in the case of an annuity directed to be paid free of tax,of such gross amount as is equal to the amount ofsuch annuity together with the amount of the sums paid by the trustee to the annuitant to meet the liabilityof the annuitant to taxonsuch annuity. 10. (4)The trustee.executor or administratormay designate a part or all of the amounts paid by him to a person that is chargeable to tax under subsection (2) to be qualifying dividends or qualifying interest and,in that case,such designated amount shall be deemed tohavebeen already taxpaid. 11. (5)The cumulative totals,at any time,of the amounts designated up to that time by a trustee under subsection (4) as qualifying dividends or qualifying interest shall not exceed the cumulative totals of qualifying dividends or qualifying interest respectively,received by the trustee,in his capacity as a 12. trustee,after the31st December,1990 andup to that time.

Section12ofCap470,which it isproposed toamend-

Imposition ofinstalment tax

• (1) Notwithstanding any other provisions of this Act,a tax to beknown as instalment tax shall bepayable for theyearofincome commencing on or after the 1st January.1990 by every person chargeable to tax or anyperson who has paid provisional tax in anyyearof income in accordancewith theprovisions of this section,but a taxpayer shall not berequired to pay the instalment tax-

2. (a) if the minimum tax payable under section 12D is higher than the instalment taxunder this section;and 3. (b) if he has reasonable ground to believe that the whole of the tax payable by him in respect of those emoluments will be recovered under section37.

• (2) The amount of instalment tax payable by any person for any current yearofincome shall be thelesserof-

5. (a) the amountequal to the tax thatwould bepayableby thatperson if his total income for the current year was an amount equal to his instalmentincome;or 6. (b) the amount specified in the preceding year assessment multiplied by one hundred and ten per cent. 7. (3) The amount of tax determined under either subsection(2)(a)or(b) shall bereduced by theaggregate of the tax that has been orwill bepaid in the current yearbyway of deduction under section 12A,17A.35or37.

• (4) The amount of instalment taxrequired to be paid for anyyear of income shall be the annual amount calculated in accordance with subsections (2) and (3) but subject to the proportions asspecified in the Twelfth Schedule.
• (5) No instalment tax shail be payable by an individual in any year of income where the total tax payable for that year ofincome is an amount not exceedingforty thousandshillings.

Section 15 ofCap.470,which it isproposed toainend-

Deductions allowed

• (1)For the purpose of ascertaining the total income of any person for a year of income there shall,subject to section 16 of this Act,be deducted all expenditure incurred in such year ofincome which is expenditure wholly and exclusively incurred by him in the production ofthat income,and where under section 27 of this Act any income of an accounting period ending on some day other than thelast day ofsuchyear ofincome is,for the purpose of ascertaining total incomefor anyyearofincome,taken tobeincomefor anyyear ofincome, then such expenditure incurred during suchperiodshall be treated as havingbeen incurred duringsuchyearofincome.
• (2)Without prejudice to sub-section (l) of this section.in computing for a year of income the gains orprofits chargeable to taxunder section3(2)(a)of this Act,thefollowing amounts shall be deducted:

• (a) bad debts incurred in theproduction of such gainsorprofitswhich the Commissioner considers to have become bad.and doubtful debts so incurred to the extent that theyareestimated to thesatisfaction of the Commissioner to have become bad,during such year of income and the Commissioner may prescribe such guidelines as may be appropriate for the purposes of determining bad debts under this subparagraph;
• (b) amounts to be deducted under the Second Schedule in respect of that year of income:
• (bb) amounts to be deducted under the Ninth Schedule in respect of that
• year of income:
• (c) any expenditure ofa capital nature incurred during thatyearofincome by theowner or occupier of farm land for the prevention of soil
• erosion;
• (d) any expenditure ofa capital nature incurred in that year of income by any person on legal costs and stamp duties in connexion with the acquisition of a lease,for a period not in excess of,or expressly capable of extension beyond,ninety-nine years.ofpremises used or to be used by him for the purposes of hisbusiness;
• (e) any expenditure,other than expenditure referred to in paragraph (f) of this section,incurred in connection with any business before the date of commencement of that business where such expenditure would have been deductible under this section ifincurred after such date,so, however,that theexpenditure shall be deemed to have been incurred on thedate onwhich such business commenced;
• in the case of the owner of premises,any sums expended by him during such year ofincome forstructural alterations to the premises where such expenditure is necessary tomaintain the existingrent:

Provided thatnodeduction shall bemadeforthe costofan extension to,orreplacementof,such premises;

• (g) the amount considered as representing the diminution in value of any implement,utensil or similar article.employed in the production of gains or profits,not being machinery or plant in respect of which a deduction may be made under the Second Schedule.at a rate of one hundred per cent in thatyear of income:
• (ga)expenditure incurred by a person carrying on a business in payment of Affordable Housing Levy as provided under section 5(b) of the AffordableHousingAct,2024:
• any expenditure of a capital nature incurred in suchyear ofincome by the owner or tenant of any agricultural land.on clearing such land,or on clearingand planting thereon permanent orsemi-permanent crops;

• (n) any expenditure incurred by anyperson for thepurposes of a business carried on byhim being-
• (i) expenditure of a capital nature on scientificresearch:or
• (ii) expenditure not of a capital nature on scientificresearch;or
• (ii) a sum paid to a scientific research association approved for the purposes of this paragraph by the Commissioner as being an association which has as its object the undertaking of scientific research related to the class ofbusiness to which such business belongs:or
• (iv) a sum paid to any university,college,research institute or other
• similar institution approved for thepurposes of thisparagraph by such Commissioner for the scientific research as is mentioned in subparagraph (iii) of this paragraph;
• (0) any sum contributed in such year of income by an employer to a national provident fund or other retirement benefits scheme established foremployees throughout Kenya by theprovisions of any written law;
• (p) any expenditure on advertising in connexion with any business to the extent that the Commissioner considers just and reasonable;and for this purposeexpenditure on advertising" includes any expenditure intended to advertise or promote,whether directly or indirectly,the sale of the goods or servicesprovided by that business:
• (t) expenditure incurred by the lessee in the case ofa lease or similar prescribed under this Act:
• (W) anydonation in thatyearofincome toa charitable organization whose income is exempt from taxunderparagraph 10 of theFirst Schedule to this Act,expenditure incurred in the construction ofa sports facility on public grounds,or to any project approved by the Cabinet Secretaryresponsible for mattersrelating to finance;
• (x) expenditure of a capital nature incurred in that year of income,with the prior approval of the Cabinet Secretary.by a person on the construction of a public school,hospital,road or any similar kind of social infrastructure;
• (Z) expenditure incurred in that year of income by a person sponsoring sports,with theprior approval of the Cabinet Secretaryresponsible for
• sports;
• (aa) expenditure incurred in thatyear of income on donations to theKenya Red Cross. county governments or any other institution responsible for the management of national disasters to alleviate the effects of a national disaster declared by thePresident.

• (ac) in the case of an employee,the amount deducted in accordance with section5(1)(a)of theAffordable Housing Act,2024;
• (ad) a contribution to a post-retirement medical fund subject to a limit of fifteen thousand shillings per month;
• (ae) contributions made to the Social Health Insurance Fund in accordance with section 27(a)and (b)of the Social Health Insurance Act,2023;
• (3) Without prejudice to subsection(1),in ascertaining the total income of aperson for ayearof income thefollowing amountsshall bededucted:
• (a) the amount of interest paid in respect of thatyear of income by the person upon money borrowed by him and where the Commissioner is satisfied that themoney so borrowed hasbeen wholly and exclusively employed by him in the production ofinvestment income which is chargeable to tax under this Act:

Provided that-

• (i) the amount of interestwhich may be deducted under this paragraph shallnotexceed theinvestmentincome chargeable totaxfor thatyear ofincome,and where the amount of that interest paid in that year exceeds the investment income of thatyear,the excessshall be carried forward to the next succeeding year and deducted only from investment income and,in so far as the interest has not already been so deducted,from investment income of the subsequent years of income:and
• (ii) for the purposes of this paragraph,"investment income"means dividends and interest but excludes qualifying dividends and qualifying interest;
• (b) the amount ofinterest not exceeding three hundred and sixty thousand shillings paid by him in respect of thatyear of income upon money borrowed by him from one of the first six financial institutions specified in the Fourth Schedule and applied to the construction of purchase or improvement of premises occupied by him during that year of income forresidential purposes:

Provided that-

• (i) if any person occupies anypremises for residential purposes for part only of a year ofincome the deduction under thisparagraph shall be reduced accordingly:and
• (ii) no person may claim a deduction under this paragraph in respect of
• more than oneresidence:
• (d) in the case of a partner.theamount of the excess,if any,ofhis share ofany loss incurred by the partnership,calculated after deducting the any partner to the partnership.over the sum of any remuneration and

such interest so payable to him less any such interest so payable by him:

• (g) in the case of a business which is a sole proprietorship.the cost of medical expenses or medical insurance cover incurred for the benefit of theproprietor.subject to a limit ofonemillion shillingsperyear.
• (4) Where the ascertainment of the total income of a person results in a deficit for a year of income,the amount of that deficit shall be an allowable deduction in ascertaining the total income of such person for thatyear and the succeeding fiveyears ofincome.
• (5) Notwithstanding subsection (4).the Cabinet Secretary may,on the recommendation of the Commissioner.extend the period of deduction beyond fiveyearswhere a person applies through the Commissioner for such extension. giving evidence of inability to extinguish the deficitwithin that period.
• (5) (a) A person to whom this subsection applies who has succeeded to any business,or to a share therein,either as a beneficiary under the will or on the intestacy of a deceased person who carried on,solely or in partnership,that business shall be entitled to a deduction in the year of income in which he so succeedsinrespectofsuch part ofany deficitin thetotal income ofthe deceased for his last year of income as is attributable to any losses incurred by the deceased in thebusiness in thatyear of income orin earlieryears of income.
• (b) This subsection applies to a person who is the widow,widower or child,of the deceased person and to a personwho was an employee or partner of the deceased person in that business;and,where there are two or more such persons,each such person shall be entitled to a deduction of so much of the whole amount deductible as his share in the businessunder the will or on the intestacy bears to the sum of the shares of all such persons.
• (5A) For the purpose of section 3(2)(g).the amount of the net gain to be included in income chargeable to tax is-
• (b)the amount computed according to thefollowing formula-

AxB/C

Where-

A is the amount of the net gain;

• B is thevalue of the interest derived,directly orindirectly.from immovable property in Kenya:and

Cis the totalvalue of the interest.

• (6)For thepurposes of this section-
• (a) "scientific research"means any activities in the fields of natural or applied science for the extension of human knowledge,and when applied to any particular businessincludes-

• (i) any scientific research which may lead to,or facilitate,an extension of that business or ofbusinesses in that class;
• (ii) any scientific research of a medical nature which has a special relation to the welfare ofworkers employed in that business,or in businesses of that class;
• (b) expenditure of a capital nature on scientificresearch does not include any expenditure incurred in the acquisition of rights in,or arising out ofscientificresearch but,subject thereto,does include all expenditure incurred for the prosecution of.or the provision of facilities for the prosecution of,scientificresearch.
• (7) Notwithstanding anything contained in this Act-
• (a) thegainsorprofitsofaperson derivedfrom any oneof thesourcesof income respectively specified in paragraph (e) of this subsection(and in this subsection called "specified sources) shall be computed separately from the gains or profits ofthat person derived from any otherofthe specified sourcesand separatelyfrom any otherincome of that person;
• (b) where the computation of gains or profits of a person in a year of income derived from a specified source results in a loss,that lossmay onlybe deducted fromgainsorprofitsof thatperson derivedfrom the same specified source in the following year and,in so far as the loss has not already been so deducted,in subsequent years of income:
• (c) the subparagraphs ofparagraph (e) of this section shall be construed so as to be mutually exclusive;
• (d) gains chargeable to tax under section 3(2)(f) of this Act and losses referred to in subsection (3)(f) of this section shall not be deemed income or losses derived or resulting from specified sources for the purposes of this subsection:
• (e)the specified sources of income are-
• (i) rights granted to other persons for the use or occupation of immovableproperty:
• (ii) employment(includingformeremployment)ofpersonal services for wages,salary,commissions or similar rewards(not under an independent contract ofservice),and aself-employed professional vocation;
• (iv) agricultural,pastoral,horticultural,forestry or similar activities, not falling within subparagraphs(i) and (ii) of this paragraph:
• (ivA)surplus funds withdrawn by or refunded to an employer in respect ofregistered pension orregistered provident funds which are deemed to be the income of the employer under section
• 8(10);

• (ivB)income ofa licensee from one licence area or a contractor from one contract area as determined in accordance with the Ninth Schedule;and
• (V) other sources of income chargeable to tax under section 3(2)(a), not falling within subparagraph (i).(i),(ii) or (iv) of this paragraph.

Section 16of Cap470,which it isproposed toamend-

Deductionsnot allowed

• (1) Save as otherwise expressly provided.for the purposesof ascertaining the total income ofapersonfor anyyear ofincome,no deduction shall be allowed inrespect of-

2. (a) any expenditure or losswhich is notwholly and exclusively incurred byhim in theproduction of the income: 3. (b) any capital expenditure,or any loss,diminution or exhaustion of capital; 4. (c) any expenditure or losswhere the invoices of the transactions are not generated from an electronic tax invoice management system except where the transactions have been exempted in accordance with the TaxProceduresAct(Cap.469B).

• (2) Notwithstanding any other provision of this Act,no deduction shall be allowed inrespectof-

6. (a) expenditure incurred by a person in the maintenance of himself,his familyorestablishmentorforanyotherpersonalor domesticpurpose including thefollowing- 7. (i) entertainment expenses forpersonal purposes;or 8. (ii) hotel,restaurant or catering expenses other than for meals or accommodation expenses incurred on business trips or during training courses or work related conventions or conferences,or 9. mealsprovided toemployeeson the employer'premises: 10. vacation trip expenses except those customarily made on home 11. leave asprovided in the proviso to section 5(4)(a) and(aa):or 12. (iv) educational fees ofemployee's dependants or relatives: 13. (b) any expenditure or loss which is recoverable under any insurance, contract,or indemnity; 14. (C)

any income tax or tax ofa similarnaturepaid on income: Provided that,save in the case of foreign tax in respect of which a claim is made under section 41,a deduction shall be allowed in respect of income tax or tax of a similar nature.including compensation tax paid on income which is charged to tax in a country outsideKenya to the extentto which that tax ispayable inrespect of

• and is paid outofincome deemed tohave accrued in or to have been derivedfromKenya;
• (d) any sums contributed to a registered or unregistered pension,saving, orprovident scheme orfund,except asprovided in section 15(2)(o).or
• e)
• a premium paid under an annuity contract;
• (f) any expenditure incurred in the production of income deemed under section10 ofthisActtohave accruedinortohavebeen derived from Kenya where such expenditure was incurred by a non-residentperson not having a permanent establishment withinKenya:
• (fa) any expenditure incurred in the production of dividend income deemed under paragraph (a) of subsection (1),of section 7 to have been derived from Kenya where such expenditure was incurred by a non-resident person not having a permanent establishment within Kenya:
• (h) any loss incurred in any business which,having regard to the nature of the business.to the principal occupation of the owner,partners, shareholders or other persons having a beneficial interest therein,to the relationship between any such persons or to any other relevant factor,the Commissioner considers it reasonable to regard as not being carried on mainly with aview to therealization ofprofits;and, without prejudice to the generality of the foregoing.a business shall bedeemednottobecarriedonfor anyyear of incomewith aview to the realization ofprofitswheremore than onequarter of the amount of the revenue expenditure incurred in such business in such year relates to goods,services,amenities orbenefits,or to theproductionofgoods services,amenities or benefits,which are ofa personal of domestic nature enjoyed by the owner,partners,shareholders or other persons having a beneficial interest in the business or a member of the family or the domestic establishment ofany such person:
• G gross interest paid or payable to a non-resident in excess of thirty per cent of earnings before interest,taxes,depreciation and amortization oftheborrowerin anyfinancialyear:

Provided that-

• (i) anyincomewhich is exemptfrom taxshall beexcludedfrom the calculation of earnings before interest,taxes.depreciation and
• amortization:and
• (ii)this paragraph shall apply to-
• (A) interest on all loans:
• (B) payments that are economically equivalent to interest;and
• (C) expenses incurred in connection with raising the finance.

• (ii) this paragraph shall not apply to-
• (V banks or financial institutions licensed under the Banking Act (Cap. 488);
• (B) micro and small enterprises registered under the Micro and Small EnterprisesAct(Cap.493C):
• (C) microfinance institutions licensed and non-deposit taking microfinance businesses under the Microfinance Act(Cap 493C):
• (D) entities licensed under the Hire Purchase Act(Cap.507):
• (E) non-deposit taking institutions involved in lending and leasing business;
• (F) companies undertaking the manufacture of human vaccines;

Section18DofCap.470,whichitisproposed toamend-

Filingof country-by-country report,masterfile and local file

• (1) Each ultimate parent entity that is resident in Kenya shall file a countryby-country report with the Commissioner in accordance with subsection(3).

2. (lA) A constituent entity that is resident in Kenya shall file a country-bycountry report with the Commissioner in accordance with subsection(1B),if one of the following conditions applies- 3. (a)the ultimate parent entity is not obligated to file a country-by-country report inits jurisdiction of taxresidence: 4. (b) the jurisdiction in which the ultimate parent entity is resident has a currentinternational tax agreementwhichKenya is a party to but does not have a competent authority agreement with Kenya at the time of filing the country-by-countryreport for the reporting financial year:or 5. (c) there hasbeen a systemic failure of thejurisdiction of tax residence of the ultimate parent entity that has been notified by the Commissioner to theconstituententityresident inKenya. 6. (IB) The provisions of subsections (l) and (lA) shall apply toa multinational enterprise group whose total consolidated group turnover, including extraordinary or investment income,is at least ninety five billion shillings during the financialyear immediately preceding the reporting financial year as reflected in its consolidated financial statements for such preceding financial year.

• (2) An ultimate parent entity or a constituent entity shall file the countryby-country report referred to under subsection (l)not later than twelve months after the last day of thereporting financial year of the group.

8. (3) An ultimate parent entity or a constituent entity of a multinational enterprise group shall file a master file and a local file to the Commissioner in such manner as the Commissioner may specify.

• (4)The master file and the local file shall be filed not later than sixmonths after the last day of the reporting financial year of the multinational enterprise group.

• (5) A country-by-country report filed under subsection (l) shall consist

• of-

• (a)

• the information relating to the identity of each constituent entity,its jurisdiction of taxresidence.if different.jurisdictionwhere such entity is organized,and the nature of the main business activity or activities of such entity;

• (b) the group's aggregate information including information relating to the amount ofrevenue.profitorlossbefore income tax,income taxpaid income tax accrued,stated capital,accumulated earnings,number of employees and tangible assets other than cash or cash equivalentswith regard to eachjurisdiction where the group has taxablepresence;and

• (C)

• any other information as may be required by the Commissioner.

• (6)A master file under subsection(3) shall contain-

• (a)

• a detailed overview of the group:

• (b)

• the group's growth engines;

• (c) a description of the supply chain of the key products and services;

• (d) the group’sresearch and development policy:

• (e) a description of each constituent entity's contribution to value

• creation:

• (f) information about intangible assets and the group intercompany agreements associated with them:

• (g) information on any transfer of intangible assets within the group during the tax period,including the identity of the constituent entities involved,the countries in which those intangible assets are registered and the consideration paid aspart of the transfer:

• (h) information about financing activities of the group:

• (i) the consolidated financial statements of the group:

• tax rulings,ifany,made in respect of the group:and

• (k) any otherinformation that the Commissioner mayrequire.

• (7)A local file under subsection (3) shall contain-

• (a) details and information on the resident constituent entity's activities within the multinational enterprise group;

• (b) management structure of the resident constituent entity;

• (c) business strategies including structuring.description of the materialcontrolled transactions, the resident constituent entity's business and competitive environment;
• (d) the international transactions and amounts paid to the resident constituent entity or received by the entity;and
• (e) any otherinformation that the Commissionermayrequire.
• (8) Where there are more than one constituent entities of the same multinational enterprise group that are resident in Kenya,the multinational enterprise group may designate one of such constituent entities to file a countryby-country report and notify the Commissioner in such form as the Commissionermay specify
• (10) A resident constituent entity ofa multinational enterprise group shall not berequired to file a country-by-countryreportwith the Commissioner with respect to thereporting financial year of the group,if-
• (a)a non-resident surrogate parent entity files the country-by-country report on thegroupwith thecompetentauthority of the taxjurisdiction of the entity;
• (b) the jurisdiction in which the non-resident surrogate parent entity is residentrequiresthe filing of country-by-countryreports:
• (c) the competent authority of the jurisdiction in which the non-resident surrogate parent entity is resident and Kenya have a competent
• authority agreement for the exchange of information;
• (d) the competent authority in the jurisdiction where the non-resident surrogate parent is resident has not notified Kenya of a systemic failure;or
• (e) the non-resident parent entity has notified the competent authority in the jurisdiction of its tax residence that the entity is the designated surrogate parent entity of the group.
• (l1) The Commissioner shall maintain the confidentiality of the information contained in a return submitted in accordancewith section 6(l)and section 6A(2)of the TaxProceduresAct (Cap.469B).

Section18 Eof Cap470,whichit isproposed toamend-

18E.Offences and penalties

Apersonwhofails to complywith theprovisionsofsections18Cand18D

commitsan offence and shall be subject to thepenaltiesprescribed under theTax ProceduresAct(Cap.469B).

Section18Fof Cap.470,which it isproposedto amend-

Definitions

For the purposes of sections 18C.18D and 18E-

"a country-by-country reportmeans a report filed under section 18D(1) describing thefinancial

activities of each constituent entity in all the jurisdictions where the group has taxable presence;

"excluded multinational enterprise group"means.with respect to any financial year of the group.a group having total consolidated group revenue of less than the amount specified in section 18D(1):

"ultimate parent entity"means an entity which-

• (a) is not controlled by another entity:and
• (b)
• owns or controls.directly or indirectly.one or more constituent entities ofamultinational enterprise group.

Section 19 of Cap.470,which it is proposed to amend-

Ascertainment ofincome ofinsurance companies

• (1) Notwithstanding anything in this Act,this section shall apply for the purpose ofcomputing thegainsorprofitsofinsurancecompaniesfrom insurance business which is chargeable to tax;and for the purposes of this Act a mutual insurance company shall be deemed to carry on an insurance business the surplus from which shall be ascertained in the manner provided for in this section for ascertaining gains or profits and which shall be deemed to be gains or profits which are charged to tax under thisAct.
• (2) Where an insurance company carries on life insurance business in conjunction with insurance business of any other class,the life insurance business of the company shall be treated as a separate business from any other class of insurance business carried on by the company.
• (3) The gains or profits for anyyear of income from the insurance business, other than life insurance business,of a resident insurance company,whether mutual orproprietary.shall be the amount arrived at after-
• (a) taking,for suchyearof income,the sum of-
• (i) the amount of the gross premiums from such business (less such premiums returned to the insured and such premiums paid on reinsurance as relate to such business);and
• (ii) the amount of other income from such business,including any commission or expense allowance received orreceivable from re-insurers and any income derived from investments held in connexion with that business:and
• (b) deducting from the sum arrived at under paragraph (a) a reserve for unexpiredrisksreferable to thatbusiness at thepercentage adopted by the company at theend of thatyear ofincome and adding thereto the reserve deducted for unexpiredrisks at the end of the previousyear of
• income:

Provided that the reserves are estimated on the basis of actuarial principles.including discounting ofultimate costs;and

• (C) deducting from the figure arrived at under paragraphs (a) and (b) of this subsection-
• (i) the amount of the claims admitted in such year of income in connexion with such business (provided that claims incurred but notpaidornotreportedbefore theend of the accountingperiod are estimated on the basis of actuarial principles including the discounting of ultimate costs):less any amount recovered in respect thereof under reinsurance:and
• (ii) the amount of agency expenses incurred in such year of income in connection with such business:and
• (ii) the amount of any other expenses allowable as a deduction (excluding costs and expenses attributable to earning exempt income)asdeterminedbytheratioofexemptinvestmentincome to the sum ofinvestment and exempt investment income in that year of income in computing the gains orprofitsof that business under this Act.
• (4) The gains orprofitsfor any year of income from the insurancebusiness, other than life insurance business,ofa non-resident insurance company.whether mutual orproprietary,shall be the amount arrived atafter-
• (a) taking.for suchyear ofincome,the sum of-
• (i) the amount received or receivable in Kenya of the gross premiums from such business (less such premiums returned to the insured and such premiumspaid onreinsurance.other than to the head office of such company,as relates to such business): and
• (ii) the amount of other income from such business,not being income from investments,received or receivable in Kenya receivable from reinsurance,other than from the head office of such company.of risks accepted in Kenya:and
• (ii) such amount of income from investments as the Commissioner may determine to be just and reasonable asrepresenting income from investment of the reserves referable to such business done in Kenya;and
• (b) deducting from the sum arrived at under paragraph (a) a reserve for unexpired risks outstanding at the end of that year of income in respect ofpolicies for which the premiums are received or receivable in Kenya at the percentage adopted by the company inrelation to its insurance business as a whole,other than life insurance,but adding to that sum thereserve deducted for similar unexpired risks atthe end of the previousyear ofincome:

Provided that the reserves are estimated on the basis of actuarial principles, including discounting of ultimate costs;and

• (C) deducting from the figure arrived at under paragraphs(a)and (b)-
• (i) the amount of the claims admitted in that year of income in connection with that business(Provided that claims incurred but not paid or not reported before the endof the accounting period are estimated on the basis of actuarial principles including the discounting of ultimate costs);less any amount recovered in respect thereof under reinsurance:and
• (ii) the amount of agency expenses incurred in such year of income in connexion with such business;and
• (ini) an amount being such proportion as the Commissioner may determinetobejust andreasonableof those expensesofthehead office of that company as would have been allowable as a deduction in thatyear ofincome in computing itsgains orprofits if the company had been a resident company in so far as those amountsrelate topolicies thepremiumsin respect ofwhich are received orreceivable inKenya.
• (5) The gainsorprofits fora year of income from the long term insurance business of a resident insurance company.whether mutual or proprietary.shall be the sum of thefollowing-
• (a) the amountof actuarial surplus.as determined under the Insurance Act and recommended by the actuary to be transferred from the life insurance fund for thebenefit ofshareholders;
• (b) any other amounts transferred from the life insurance fund for the benefit of shareholders:and
• (C) thirty per centum of management expenses and commissions that are in excess of the maximum amounts allowed by the Insurance Act (Cap.487).
• (5A)Where the actuarial valuation of the life insurance fund results in a deficit for ayear of income and the shareholdersarerequired toinjectmoney into the life insurance fund,the amount of money so transferred shall be treated as a negative transfer for the purposes of subsection (5)(a):

Provided that the amount of negative transfer shall be limited to the actuarial surplus recommended by the actuary to be transferred from the life insurancefund forthebenefitofshareholdersinpreviousyears of income.

• (6) The gains or profits for a year of income from the long term insurance business of a non resident insurance company,whether mutual or proprietory, shall be the sum of the following-

2. (a) thesameproportion of the amount ofactuarial surplusrecommended by the actuary to be transferred to the shareholders as the actuarial liability in respect of its long term insurance business in Kenya bears

to the actuarial liability in respect of its total long term insurance business;and

• (b) the same proportion of any other amounts transferred from the life insurancefund for thebenefitofshareholdersas the actuarial liability in respect of its long term insurance business in Kenya bears to the actuarial liability in respect of its total long term insurance business; and
• (C) the same proportion of thirty per cent ofmanagement expenses and commissions thatare in excess ofthemaximum amounts allowed by the Insurances Act(Cap.487) as the actuarial liability in respect of its long term insurance business in Kenya bears to the actuarial liability in respect of its total long term insurance business.
• (6A) Where the actuarial valuation of the life insurance fund results in a deficit forayearofincome and the shareholders arerequired to injectmoney into the life insurance fund,the proportionate amount of the money so transferred
• shall be treated as a negative transfer for the purposes of subsection (6)(a):

Provided that the amount of negative transfers shall be limited to the amountofactuarial surplusrecommended by theactuary to be transferred from the life insurance fund for the benefit of the shareholders in previousyearson

income.

• (6B) For the avoidance of doubt. the gains arising from the transfer of property by an insurance company other than property connected to life insurance business shall be taxed in accordance with the provisions of the Eighth
• Schedule.
• (7) In this section-

the life insurance fund of the company such part of the life insurance fund as represents the liability of the company under its annuity contracts;

"company"includes a body of persons;

"exempt investment income"means dividends chargeable to tax under section 3(2)(a)(i) plus income from disposal of investment shares traded in any

securities exchange operating in Kenya:

"investment income"does not include-

• (a) dividends chargeable to tax under section 3(2)(a)(i):and
• (b) income from the disposal ofinvestmentshares traded in any securities
• exchange operating in Kenya;

"life insurance fund" does not include the annuity fund,if any,nor such part

ofthe life insurance fund asrepresents the liability of the company under any registered annuity contract,registered trust scheme,registered pension scheme or registered pension fund;

"life insurance premiums"means premiums referable to the life insurance business other than annuity business;

"life insurance expenses" means expenses referable to the life insurance business other than annuity business.

• (8)The amount of the gains or profits from insurance business,both from life insurance and from other classes of insurance business.arrived at under this section shall be taken into account together with any other income of the company charged to tax in ascertaining the total income of that company.

Section23of Cap 470,it isproposed to amend-

Transactions designed to avoid liability to tax

• (1)Where the Commissioner is of the opinion that the main purpose or one of the main purposes for which a transaction was effected (whether before or after thepassing of thisAct) was the avoidance orreduction of liability to taxfor anyyear of income,or that the main benefit which might have been expected to accrue from the transaction in the three years immediately following the completion thereof was the avoidance or reduction of liability to tax,he may.if he determines it to be just and reasonable.direct that such adjustments shall be made as respects liability to tax as he considers appropriate to counteract the avoidanceorreduction ofliability to taxwhich couid otherwise be effected by
• the transaction.
• (2) Without prejudice to the generality of the powers conferred by subsection(l) of this section,those powers shall extend-
• (a)
• to the charging to tax of persons who,but for the adjustments,would notbe charged to thesame extent;
• (b) to the charging of a greater amount of tax than wouldbe charged but for the adjustments.
• (3)Any direction of the Commissioner under thissection shall specify the transaction or transactions giving rise to the direction and the adjustments as respectsliability to taxwhich the Commissioner considers appropriate.

Section24of Cap.470,which it isproposed to amend-

Avoidance of tax liability bynon-distribution of dividends

respective interests and shall be deemed to have been paid on a date twelve

• (1) Where the Commissioner is of the opinion that a private company has not distributed to its shareholders as dividends within a reasonable period,not exceeding twelve months,after the end of its accounting period such part of its income for that period which could be so distributed without prejudice to the requirements of the company's business,he may direct that that part of the income of the company shall be treated for the purposes of this Act ashaving been distributed as a dividend to the shareholders in accordance with their months after the end of that accountingperiod.

Section 35 of Cap.470,it is proposed to amend-

Deduction of tax from certain income

• (1) Every person shall,upon payment of any amount to any non-resident

2. person not havingapermanent establishment in Kenya inrespect of- 3. (a) a management orprofessional fee or training fee except- 4. a commission paid to a non-resident agent in respect of flowers. fruits orvegetables exported from Kenya and auctioned in any market outside Kenya and audit fees for analysis ofmaximum 5. residuelimitspaid toa non-residentlaboratory or auditor:or 6. a commissionpaid by a resident air transport operator to a non- 7. residentagentinordertosecureticketsfor international travel; 8. (im) payments made by the national carrier to a non-resident for specialized technical.maintenance,compliance,training,or digital systems support services,where such services are not available in Kenya or the service provider is certified or accredited by an international regulatory,standard-setting,or 9. licensing body. 10. (b) 11. a royalty ornatural resource income: 12. a rent.premium or similar consideration for the use or occupation of property,except aircraft or aircraft engines,locomotives or rolling 13. (c) stock:

Provided that-

• (i) where the bond,loan,claim,obligation or other evidence of indebtedness is acquired by a person exempt under the First Schedule or a financial institution specified in the Fourth Schedule from a non-resident person.such an exempt person or financial institutionshall deduct taxfrom thedifferencebetween
• the acquisition price and the original issue price;and
• m where a non-resident person disposes of a bond,loan,claim. obligation or other evidence ofindebtedness acquired from a person exempt under the First Schedule or a financial institution specified in the Fourth Schedule,tax shall be deducted upon final redemption from thedifference betweenthe final redemption price and the acquisition price,if the exempt person or financial institution certifies the acquisition price to the satisfaction of the Commissioner:
• (d) a dividend:
• (e) interest and deemed interest;
• (f) a pension or retirement annuity:
• (g) private) for the purpose of entertaining.instructing,taking part in any
• sporting event or otherwise diverting an audience;

• (h) any activity by way of supporting, assisting or arranging any
• appearance or performance referred to in paragraph (g)of this subsection,
• (i)
• withdrawals:
• (l)gains or profits from the business of transmitting messages which is chargeable to tax under section 9 (2);
• (n) insurance or reinsurance premium,except insurance or reinsurance premium paid inrespect ofaircraft:
• sales promotion,marketing,advertising services,and transportation of
• (0) goods (excluding air and shipping transport services):
• (p) gains from financial derivatives:
• (b) digital content monetisation:
• (山)
• (s)
• supply of goods to a public entity;
• making orfacilitating payment on a digital marketplace;and
• (u) gains or profits which are chargeable to tax under section9(1) derived from the businessof a ship ownerorcharterer;
• (lA) Subsection (l) shall not apply to payments made by filming agents and filming producers approved by the Kenya Film Commission to actors and crew members approved for purposes of paragraphs (g) and (h).
• (3) Subject to subsection (3A),a person shall,upon payment of an amount
• to a person resident or having a permanent establishment inKenya in respect of-
• (a) a dividend;
• (b) interest,other than interest paid to a financial institution specified in the Fourth Schedule which is resident or which has a permanent establishment in Kenya,including interest arising from a discount upon final satisfaction or redemption of a debt,bond,loan,claim. obligation or other evidence of indebtedness measured as the original issue discount,otherthan interest ordiscountspaid to aperson exempt under the First Schedule or a financial institution specified in the Fourth Schedule:

Provided that-

• (i) where the bond,loan,claim,obligation or other evidence of indebtedness is acquired by a person exempt under the First Schedule or a financial institution specified in the Fourth Schedule from the resident person,such an exempt person or financial institution shall deduct taxfrom the difference between the acquisition price and the original issue price;and
• (ii) where the resident person disposes of a bond,loan,claim. obligation or other evidence ofindebtedness acquired from a person exempt under the First Schedule or a financial institution

specified in the Fourth Schedule,tax shall be deducted upon final redemption from the difference between the final redemption price and the acquisition price,if the exemptperson or financial institution certifies the acquisition price to the satisfaction of the Commissioner;

• (c) an annuity payment excluding that portion of the payment which represents the capital element;
• (d) a commission orfeepaid or credited by an insurance company to any person for the provision,whether directly or indirectly,of an insurance cover to any person or group of persons (excepta
• commission or feepaid or credited to anotherinsurance company);
• (e) a pension or a lump sum commuted orwithdrawn from a registered pension fund or a lump sum out ofa registered provident fund in excess of the tax exempt amounts specified in section8(4)and (5),or any amount paid out ofa registered individual retirement fund.or a benefitpaid out of the National Social Security Fund in excess of the
• tax exempt amount specified in section8(5):
• (ee)surplus funds withdrawn from or paid out ofregistered pension or
• provident funds;
• (f) management or professional fee or training fee,the aggregatevalue of which is twenty-four thousand shillings ormore in a month:

Provided thatfor the purposes of this paragraph,contractual feewithin the meaning of"management or professional fee" shall mean payment for work done inrespect ofbuilding,civil or engineering works;

• (g) a royalty ornatural resource income;
• (h)
• withdrawals;
• G rent,premium or similar consideration for the use or occupation of
• (k)
• immovableproperty;
• sales.promotion,marketing and adverttising services;
• (1)
• (m)
• digital content monetisation:
• supply of goods to apublic entity:
• (n) making or facilitating payment on a digital marketplace:and
• (3A) Notwithstanding the provisions of subsection (3),only a person appointed for that purpose by the Commissioner,in writing,shall deduct tax
• under paragraph (j) of that subsection.
• (3AA) A person who receives rental income onbehalf of the owner of the
• premises shall deduct tax therefrom:

Provided that only a person appointed by the Commissioner in writing for thatpurpose may deduct tax under this section.

• (3AB) A person who deducts rental income tax under this section shall. within five working days after the deduction was made,remit the amount so deducted to the Commissioner together with a return in writing of the tax deducted and such otherinformation as the Commissionermayrequire.
• (3AC) The Commissioner shall.upon receipt of the amount remitted under subsection (3AB),furnish the person from whom the rental income tax was withheld with a certificate stating the amount of the rent and tax deducted therefrom.
• (4) No deduction shall be made under subsection (1) or(3) from a payment which is income exempt from tax under this Act,or to which an order made under this Act,or to which an order made under subsection (7) or(8) applies.
• (5) Where a person deducts tax under this section he shall,within five working days after the deduction wasmade-
• (a) remit the amount so deducted to the Commissioner together witha return in writing of the amount of the payment the amount of tax deducted,and such other information as the Commissioner may specify:and
• (b) furnish the person to whom the payment is made with a certificate stating theamount of thepayment and the amount of the tax deducted.
• (5A) The Commissioner shall pay the tax deducted from withdrawals under subsection (1)(i) and (3) (h) into the Sports.Arts and Social Development Fund established under section 24 of the Public Finance Management Act.(Cap
• 412A).
• (6D) A person aggrieved by the imposition,by the Commissioner,of a penalty under this section may,by notice in writing to the Commissioner.object to the imposition within thirty days of the date of service of thenotice of the imposition.
• (7) The Cabinet Secretary may,by notice in the Gazette,exempt from the provisions of subsection (3) of this section any payment or class ofpayments made by any person or class of persons resident or having a permanent establishment inKenya.
• (8) The Cabinet Secretary may.by notice in the Gazette.amend or add to the FourthSchedule in
• Section52 of Cap 470,which it isproposed to amend-

Returns of income and notice of chargeability

• (1)The Commissioner may,by notice in writing,require a person to furnish him within a reasonable time,not being less than thirty days from the date of service of thenotice,with a return of income for any year of income containing a full and true statement of the income of such person,including income deemed tobehis under thisAct,liable to tax and of thoseparticulars that may be required for the purposes of this Act;and such return shall include a

declaration signed by such person,or by the person in whose name he is assessable,that such return is a full and true statement:

Provided that in the case of a person carrying on a business has made a provisional return ofincome,the return of income under this subsection may be made within a period not exceeding nine months from the date to which he makes up the accounts of such business.

• (2) In the case of the executors or administrators of a deceased person.or of theliquidator of a resident company,orof a bankrupt,or of a person whom the Commissioner has reason to believe is about to leaveKenya.the Commissioner may,by notice in writing,require him to furnish a return ofincome at any time whether before orafter theend of theyear of income towhichsuch return relates.
• (3) Every person chargeable to taxfor a year of income who-

3. (a) withinfourmonths after theend of suchyear ofincome;or 4. (b) being a person carrying on a business the accounting period for which ends on some day other than 3lst December in such year of income hasnot made aprovisionalreturn ofincome for thatyear of income within four months of the end of such accounting period,hasnot been required tomakeareturn ofincome forsuch yearofincome under subsection (l) shall,within fourteen days after the expiration of the period offour months,givenotice in writing to the Commissioner that 5. he is so chargeable:

Provided that an employeeshall notberequired togivenotice-

• (i) ifhe had no income chargeable to tax for such year ofincome
• other than from emoluments;and
• (ii) if the tax payable in respect of those emoluments has been
• recovered by deduction undersection 37of this Act.
• the Commissioner may,by notice in writing,require the precedent resident
• partner,that is the partnerwho,of the resident partners-
• (a)
• isfirst named in the agreement ofpartnership:or
• (b) if there be no agreement,is specified by name or initials singly,or with precedence to the other partners.in the usual name of the partnership:or
• (c) is first named in any statement required for the purposes of
• registration of the business under any law of Kenya;or
• (d) is the precedent resident active partner if the partner named with precedence isnot an activepartner,to furnish himwithin a reasonable time,not being less than thirty days from the date ofservice ofsuch notice,with a return of income of the partnership.ascertained under this Act as if the partnership were a person liable to tax,for anyyear ofincome prior to that in which thenotice is served containing a full

and true statement of the income and of such particulars as may be establishment in Kenya.

Section52Bof Cap.470,which it isproposed toamend-

Final return with self-assessment

• (1) Notwithstanding any other provision of thisAct-

2. (a) everyindividual chargeable to taxunder thisAct shall foranyyear of income commencing with the year of income 1992,furnish to the Commissioner a return of income.including a self-assessment of his taxfrom all sources ofincome,not later than the last dayofthesixth month followingtheend ofhisyearofincome:and 3. (b) every person,other than an individual chargeable to tax under the Act. 1992.furnish to the Commissioner a return of income,including a self-assessment of his tax on such income.not later than the last day of the sixth monthfollowing the end of theyear of income.

• (2) The return of income together with the declared self-assessment of tax on the declared income,shall be prepared on such a form or forms as shall be prescribed by the Commissioner.
• (3) The declared self-assessment shall be calculated by reference to the appropriaterelief andrates of tax in forcefor theyear of income.

6. (4)Every company liable to tax under this Act shall also include with the self-assessment and return of income,an assessment and return of any dividend distributed out of untaxed gains orprofitsdue withrespect to such taxyear and the taxso calculated shall bepayable at the due datefor theself assessment.

First Schedule toCap470,which it isproposed to amend-

FIRST SCHEDULE[ss.13and14]

EXEMPTIONS

PartI-INCOMEACCRUEDIN,DERIVEDFROM OR RECEIVEDINKENYAWHICHISEXEMPTFROMTAX

• 1.So much of the income of a person as isexpressly exempted from income tax by or under the provisions of any Act ofParliament for the time being in force.to the extent provided by such Act.
• 2.The income of any person who,or organization which,is exempt from income tax by or under anyActofParliament for the time being in force,to the extent provided by suchAct.
• 6.The income,other than income from investments.of an amateur sporting association,that is to say,an association-

• (a) whose sole or main object is to foster and control any outdoor sport;
• and
• (b) whosemembers consist only ofamateurs or affiliated associations the membersofwhich consist only ofamateurs;and
• (c) whose memorandum of association or by-laws have provisions definingan amateur ora professional and providing that no person maybe or continue to be a member of such association if such person is not an amateur.
• 8.The income of any county government.
• 10.Subject to section 26,the income of an institution,body ofpersons or irrevocable trust,of a public character established solely for thepurposes of the reliefofthe poverty or distressof thepublic,or for the advancement ofreligion oreducation-
• (a) established in Kenya;or
• (b) whose regional headquarters is situated in Kenya,in so far as the Commissioner is satisfied that the income is to be expended either in Kenya or in circumstances in which the expenditure of that income is
• for thepurposeswhichresult in thebenefitof theresidentsofKenya:

Provided that any such income which consists of gains or profits from a business shall not be exempt from tax unless such gains or profits are applied

solely to suchpurposesand either-

• such business is carried on in the course of the actual execution of such purposes:
• (ii) the work in connexion with such business is mainly carried on
• by beneficiaries under such purposes;or
• (ii) such gains or profits consist of rents (including premiums or any similar consideration in the nature of rent) received from the leasingor lettingof land and anychattels leased orlet therewith;
• andprovided further that an exemption under thisparagraph-
• (V) shall be valid for a period of five years but may be revoked by the Commissioner for any just cause;and
• (B) shall,where an applicant has complied with all the requirements of this paragraph,be issued within ninety days of the lodging of the application.

Provided further that in this paragraph,institution,body of persons or irrevocable trust,of apublic charactermeans an entity established tobenefit the public in a transparent and accountable manner without restriction or discrimination regardless of the level of charges or fees levied for services rendered,and which utilises its assets or income exclusively to carry out the purpose forwhich the entity was establishedwithout conferring a private benefit

toan individual.

• 11.The income of any person from any management or professional fee, royalty or interest when the Cabinet Secretary certifies that it is required to be paidfree of taxby the terms of anagreement towhich the Government is a party either as principal or guarantor and that it is in the public interest that such incomeshallbeexemptfrom tax.
• 12.The income of anyregistered pension scheme.
• 13.The income of any registered trust scheme.
• 14.The income of any registered pension fund.
• 15.The income of a registered provident fund.
• 16.The income from the investment of an annuity fund,as defined in
• section 19 of this Act.of an insurance company.
• 17.Pensions or gratuities granted in respect of wounds or disabilities caused in war and suffered by therecipients ofsuchpensionsorgratuities.
• 22.Thatpart of the incomeof any officer of theGovernment or of the Community accrued in or derived from Kenya which consists of foreign allowancespaid to such officer frompublic funds inrespect of his office:

Provided that.where any person to whom such an allowance is paid is granted a deduction under section 15 of this Act in respect of any expenditure incurred in relation to an activity for which the allowance is paid,then the exemption conferred by this paragraph shall not apply to so much of such allowance as is equal to the amount ofsuch deduction.

• 23.The income of the EastAfrican DevelopmentBankand of Corporations established underArticle71 of theTreaty for EastAfrican Co-operation together with the income of subsidiary companies wholly owned by that Bankor by any ofthesaid Corporations

26.Theemoluments-

• (b)of any person in the public service of the Government of that country in respect of his office under that Government where such person is resident in Kenya solely for the purpose ofperforming the duties of his office,where such emoluments are payable from the public funds ofsuch country and are subject toincome tax insuch country
• 27.The emoluments payable out of foreign sources in respect of duties performed in Kenya in connexion with a technical assistance or other agreement for developmental services or purpose to which the Government or the Community is a party to anynon-resident person or to a person who isresident solely for the purposes of performing those duties,in any case where the agreementprovidesfor the exemption of suchemoluments.
• 35.Interest on a savings account held with the Kenya Post Office Savings
• Bank.
• 36.Such part of the income of an individual,chargeable to tax under section3(2)(f) asconsists of a gain derived from the transfer of-

• (C) a private residence if the individual owner has occupied theresidence continuouslyforthe threeyearperiodimmediatelypriortothetransfer concerned:

Provided that-

• (i) in determining whether or not a person has occupied a residence continuously for three years,any period during which he was temporarily absentfrom theresidenceshall be ignored:
• (i) references to a private residence include the immediately surroundinglandutilizedexclusivelyforpersonalpurposesasan adjunct to the residence and not for the production ofincome, but does not include any part of the residence and land utilized for business purposes;
• (ii) no individual may claim orbe taken to have used more than one residence as his residence at the same time for the purposes of this Act;
• (iv) no individuals may claim or be taken to have used more than one residence as their residence for the purposes of this Act at any time when theywerehusband andwifeliving together;
• no individual shall claim orbe taken to have used a residenceas a residence at any time when he wasa dependant of either or both ofhis parents;
• (vi) where a residence is used in part for business purposes,or is transferred in a single transaction together with land and other property used for the production of income,the taxable value of such property used for residential purposes shall be separately production ofincome:
• (d) property(being land) transferred by an individual where-
• (i) the transfer value is not more than threemillion shillings:or
• (ii) agricultural property having an area of less than fifty acreswhere such property is situated outside a municipality.gazetted township or an area that is declared by the Cabinet Secretary,by notice in the Gazette.to be an urban area for thepurposes of this Act:
• property (including investment shares) which is transferred or sold for thepurposeofadministering the estateofa deceasedperson 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:

Provided that where there is a court case regarding such estate the period oftransfer or sale under thisparagraph shall be twoyearsfrom the date of the finalization of such court case.

• (g) property,including investment shares,which is transferred or sold for the purpose of transferring the title or the proceeds into a registered family trust.
• 42.The income of a non-resident person who carries on the business of exemption to aircraft owners,charterers or air transport operators who are not
• aircraft owner,charterer or air transport operator,from such business where the country in which such non-resident person is resident extends a similar resident in such country but who are resident in Kenya.
• 43.The income of a registered individual retirement fund.
• 45.Income of the National Social Security Fund provided that the Fund complieswith such conditions asmay beprescribed.
• 45A.All contributions and other payments into and out of the Social Health Insurance Fund established under section 25 oftheSocial Health Insurance Act.
• 2023.

48. Gains arising from trade in securities listed on any securities exchange operating inKenya byany dealer licensed under the Capital MarketsAuthority Act(Cap.485A):

Provided that such securities have been held for a period not exceeding

twenty-fourmonthsfrom the date ofacquisition.

arrangements made or guaranteed by the Export-lmport Bank of the United

• 49.Interest income accrued in or derived from Kenya under financial States,an agency of the United States of America.
• 50.(l) Investment income of a pooled fund or other kind of investment consisting ofretirement schemes.provided that all the constituent schemes of the pooled fund are registeredby the Commissioner.
• (2) For the purposes of this paragraph,pooled fund"has the meaning
• assigned to it under the Retirement Benefit Act,1997).
• 51.Interest income accruing from all listed bonds,notes or other similar securities used to raise fundsfor infrastructure and other social services,provided that such bonds,notes orsecuritiesshall have a maturity ofat least threeyears.
• 53.Payment of pension benefits from a registered pension fund,registered provident fund,registered individual retirement fund,public pension scheme or National Social Security Fund,upon attainment of theretirement age determined in accordancewith therules of thefund or thescheme:

Provided that this exemption shall also apply to-

• payment of gratuity;
• (a)
• (aa) other allowances paid under a pension scheme:
• (b)payment of a retirement annuity:or

• (c) withdrawals from the fund prior to attaining the retirement age due to ill health;orwithdraws from the fund after the twentyyears from the
• date ofregistration as a member of thefund.
• 54.Interest income on bonds issued by the East African Development
• Bank.
• 55.The income of theNational HousingDevelopmentFund
• 56.The principal sum of a registered family trust.
• 58.Income earned by an individual who is registered under the Ajira Digital Program for three years beginning 1st January,2020;

Provided that-

• the individual shall qualify for the exemption upon payment of
• (a) registration fee of ten thousand shillings per annum:and
• (b) the Cabinet Secretary shall,in consultation with the Cabinet Secretary for theministry responsibleforinformationcommunication technology,issue regulations for the better carrying out of this provision.
• 58.Any capital gains relating to the transfer of title of immovable property
• toa family trust.
• 59.The amount withdrawn from the National Housing Development Fund topurchase a house by a contributorwho is a first-timehome-owner.
• 60.Interest income accruing from all listed bonds,notes or other similar securities used to raise funds for infrastructure,projects and assets defined under Green BondsStandards and Guidelines,and other social services:

Provided that such bonds,notes or securities shall have a maturity of at least three years.

• 61.Deemed interest in respect of an interest free loan advanced to a company undertaking the manufacture ofhuman vaccines.
• 62.Payments made to non-resident service providers not having a
• permanent establishment inKenya inrespect of services provided to a company undertaking the manufacture of human vaccines.
• 64.Dividends paid by a company undertaking the manufacture of human vaccines to any non-residentperson.
• 66.Dividends paid by Special Economic Zone enterprises,developers and
• operators licensed under theSpecial EconomicZonesAct(Cap.517A).
• 67.Dividends paid by Special Economic Zone enterprises,developers and operators to anynon-residentperson.
• 68.Royalties paid to a non-resident person by a company undertaking the manufacture ofhuman vaccines.

• 69.Interest paid to a resident person or non-resident person by a company undertaking the manufacture ofhuman vaccines.
• 70.Investment income from apost-retirementmedical fund,whether ornot the fund is part of a retirement benefits scheme.
• 71.Income earned by a non-resident contractor.sub-contractor,consultant oran employeeinvolved in theimplementation ofaprojectfinanced through a one hundred per cent grant under an agreement between the Government and a developmentpartner,to the extentprovidedfor in theAgreement:

Provided that-

• the non-resident contractor,subcontractor,contractor or employee
• (a) shall maintain thisstatusfor the tenureofthe agreement;
• (b) any other income not directly related to the project earned by that nonresident contractor,subcontractor,consultant or employee shall be subjectto tax.
• 72.Gains on transfer of property within a special economic zone by a licensed special economic zone developer.enterprise or operator.
• 73.Royalties,interest,management fees.professional fees,training fees, developer,operator or enterprise,in the first ten years of its establishment,to a
• consultancy fee,agency or contractual fees paid by a special economic zone non-residentperson.
• 74.Gains on transfer of securities traded on any securities exchange licensed by the Capital MarketsAuthority isnot chargeable to taxunder section
• 3(2)(f).
• 75.Dividends paid by a company certified by the Nairobi International Financial Centre Authoritywhere the companyreinvests at least two hundred and fiftymillion shillingsinKenya,in thatyear of income.

SecondScheduletoCap470,which itisproposed toamend-

SECONDSCHEDULE[ss.4,5and15] INVESTMENTALLOWANCE

1.Deduction of investmentallowance

• (1) Where a person incurs capital expenditure in respect of an item listed in the first column of the table.an investment allowance may be deducted in computing the gains or profits of that person at the corresponding rate specified in thesecond column.for eachyearofincome-

Capital expenditure incurred Rate of InvestmentAllowance

• (a)Buildings
• (i) Hotel building50%in thefirstyearofuse
• (i)
• Buildingused formanufacture50% in thefirst year of use

• (ii)
• Hospital buildings50%in thefirstyearofuse
• (iv) Petroleum or gasstorage facilities50% in the firstyear of use
• (V) Residual value to item (a)(i) to (a)(iv) 25% per year,in equal
• instalments
• (vi) Educational buildingsincluding student hostels 1o% peryear,in
• equal instalments
• (vii) Commercial building 10%peryear,in equal instalments
• (viii)
• Industrial Building10%
• (ix) Dock 10% in equal instalments

(b) Machinery

• (i)
• Machinery used formanufacture50% in thefirstyearofuse
• (i)
• Hospital equipment50% in thefirstyear ofuse
• (ili) Shipsor aircrafts50% in the first year of use
• (iv) Residual value items (b)(i) to (b)(ii) 25% per year.in equal instalments
• V Motor vehiclesand heavy earth moving Equipment 25%per year,in equal instalments Capital expenditure incurred Rate of InvestmentAllowance
• (vi) Computer and peripheral computer hardware and software. calculators,copiers and duplicating machines 25% per year,in equal instalments
• (vii) Furniture and fittings 10%per year.in equal instalments
• (viii) Telecommunications equipment 10%per year,in equal instalments
• (ix) Filming equipment by a local film producer licensed by the
• Cabinet Secretaryresponsible for filming25%per year,in equal instalments
• (x) Machinery used to undertake operations under a prospecting right 50% in the first year ofuse and 25% per year,in equal instalments
• (xi) Machinery used to undertake exploration operations 50% in the firstyearofuse and 25%peryear,in equal instalments
• (xii) Other machinery 10%per year,in equal instalments
• (c) Purchase or acquisition of an indefeasible right to use fibre optic cable
• orspectrumlicensebya telecommunication operator:

Provided that,in the case of the spectrum license purchased or acquired before the 1st July 2025,the deduction shall berestricted to

• (e)
• the unamortizedportion over theremaining useful lifeof the spectrum license.10% peryear,in equal instalments
• (d) Farmworks50% in the first year of use and 25% peryear,in equal
• instalments

Provided that-

• (a) in the case of change of user of a building.the deduction shall be restricted to theresidualvalue or unclaimed amount at the applicable rate;
• (b)
• in respect of a hotel,educational or hospital building,the building shall be licensed by the competent authority:and
• (C) "building used for manufacture"includes any structure or civil works deemed tobepart ofa buildingwhere thestructure or civil works relates or contributes to the use of the building:
• (d) "commercial building"includes-
• (i) a building used as an office,shop.showroom,godown, storehouse,or warehouse used for storage ofraw materials for manufacture of finished or semi-finished goods:or
• (ii) civil works relating to water or electric power undertaking,but does not include an undertakingnotcarried on by way of trade;
• "machinery used for manufacture"means machinery used directly in the process of manufacture,and includes machinery used for the followingancillarypurposes-
• (i
• generation,transformation and distribution of electricity;
• (ii)
• clean-up and disposal of effluents and other waste products;
• (ii) reduction of environmental damage;
• (iv) water supply or disposal;
• (v) maintenance of the machinery:or
• (vi) scientificresearch and development:
• (f) "manufacture"means the refining or making,including packaging,of goodsfrom raworsemi-finished goods,or the generationofelectrical energy,or the transformation and distribution of electricity,but does not include design,storage,transport,administration or any other ancillary activity;
• (g) civil works include-
• (i
• roads and parking areas;
• (ii)
• railway lines and related structures;
• (iii) water,industrial effluent and sewerage works;

• (iv) communications and electrical posts and pylons and other electrical supplyworks;
• (V)
• security walls and fencing:and
• (vi) earthworks for telecommunication equipment and construction works undertaken in connection with the installation and
• maintenance of telecommunication equipment and related structures
• (h) "Farmworks" means farmhouses,labour quarter,any other immovable building necessary for theproper operation of the farm, fences, dips,drains,water and electricity supply works and other
• worksnecessaryfor theproper operation of thefarm.
• (i) "dock"includes a container terminal berth,harbour.wharf.pier.jetty storage yard.or other works in or at which vessels load or unload
• merchandisebut doesnot include a pier or jetty used forrecreation;
• "industrial building includes a building in use for the purpose of transport,bridge,tunnel,inland navigation water and electricity or hydraulic power undertaking;
• (k) "machinery used for agriculture"means machinery used directly in agriculturalactivities including tilling,planting,irrigation,weeding
• and harvesting;
• (1) "telecommunications equipment includes civil works deemed as part of the telecommunication equipment or civil works that contribute to the use of the telecommunication equipment.
• (lA) Notwithstanding paragraph 1,the investment deduction shall be one hundred per cent where-
• (a) the cumulative investment value in the preceding three years outside Nairobi City County and Mombasa County is at least one billion
• shillings:

Provided that where the cumulative value of investment for the preceding threeyearsofincome wasone billion shillings onorbefore the 25th April,2020,and the applicable rate ofinvestment deduction was one hundred and fifty per cent,that rate shall continue to apply for the investment made on or before the 25th April,2020 or the investment deduction shall be one hundred and fifty per cent where the cumulative investmentvalue for thepreceding fouryears from the date thatthisprovision comes into force or the cumulative investment for the succeeding three years outside Nairobi City County or

Mombasa County is at least one billion shillings;

• (b) the investment value outside Nairobi City County and Mombasa County in thatyear ofincome is at least two hundred andfiftymillion
• (c)
• shillings:or
• the person has incurred investment in a special economic zone.

• (1B)Paragraph(1A) shall apply to items listed under paragraphs 1(1)(a)(i) and (ii).and (1)(b)(i).

2.Calculationofwritten down orresidualvalue

The written down orresidualvalue ofeach item referred to inparagraph 1 shall be calculated separately,and shall be the balance of capital expenditure takinginto account the sale of the item after deductinginvestmentallowance.

3.Treatment of excess or deficit ofrealised amounts

Where the amountrealised from the sale of an item referred to in paragraph Iexceeds the written down or residual value,the excess shall be treated as a tradingreceiptor,conversely,a trading lossfor theyear of income.

4.Balancing charge or deduction on cessation of business

• (1)Where aninvestment allowance hasbeen deducted under paragraph Iin business for the purposes ofwhich the item was used and the item ceases to be
• computing the gains or profits of a person and that person ceases to carry on owned by him,a balancing charge or balancing deduction shall be made or allowed for theyear ofincome inwhichhe ceased tocarryonbusiness.
• (2)Where the person referred to in subparagraph (1) is a partnership,the person shall be deemed to have ceased to carry on business only when all the
• partners cease to carry on that business.
• (3) Where the items are sold by a liquidator of a company, the balancing
• charge orbalancing deduction shall bemade orallowed in theyear ofincome in which thewindingupcommenced.
• (4) Where on cessation of a business.a balancing charge or balancing deduction is tobemade or allowed under thisparagraph and-
• (a) the consideration received exceeds the residual value at the time of cessation,the balancing charge shall be the excess amount or,where the residualvalue isnil,the consideration received:or
• (b) a consideration is not received by the person who owns the items,or the residual value at the time of the cessation exceeds the consideration received,the balancing deduction shall be the residual value at the time of cessation,or the excess thereof over the consideration received.

5.Determination ofmarket value of items used in a business

Where anitem is brought into use for a business without beingpurchased or

ceases permanently to be used without being sold,it shall be deemed to have beenpurchased orsold,and the cost or amountrealized shall bedeemed tobe the marketvalue.

• 6.Restriction on capital expenditure on motor vehicles

• (1) Where capital expenditure exceeding three million shillings is incurred on a motor vehicle,other than a commercial vehicle,that capital expenditure

2. shall berestricted to three million shillings.

• (2) Where the motor vehicle referred to in subparagraph(1) is sold,the sale price shall be deemed to be theproportion of theproceedsof sale,havingregard to the original purchase price and three million shillings.

4. 7.Limitation on capital expenditure on buildings

Capital expenditure incurred on the construction of a building does not

include capital expenditure on the acquisition of,orofrightsin or over.land.

• 8.Ascertainment ofcapital expenditure on buildings
• (1) Where a building is used partly for purposes other than the purposes specified inparagraph I,the capital expenditure on which the deduction inrespect of thebuilding is calculatedshall be the expenditure attributableto that portion of the building which is used for those purposes,but where the expenditure attributable exceeds ninety per cent of the total expenditure incurred on the construction of the building the whole building shall be treated as used for the specified purposes.
• (2) Where an existing building is extended by further construction,the extension shall be treated as a separate building.
• (3) Where capital expenditure is incurred on the construction of a building and before that building is used it is sold,the seller shall not be allowed a deduction.
• (4)Where a person purchases the building referred to in subparagraph (3). that person shall be deemed to have incurred capital expenditure on its construction equal to thecapitalexpenditureactuallyincurred on its construction orto theamountpaid byhim,whicheverislesser.
• (5) Where the building referred to in subparagraph (3) is sold more than oncebefore it is used,subparagraph(4) shall apply but only in relation to thelast
• sale.
• (6)Where a building referred to in subparagraph (3)is sold by a person carrying on a business of construction for sale,the qualifying capital expenditure shall be theprice paid on the sale.
• 9.Expenditure incurred for a person

Anyexpenditure incurred onbehalfofa personby anotherperson.shall not qualify for deduction under thisSchedule.

ThirdSchedule to Cap.470,which it isproposed toamend

THIRDCHEDULE[ss.29,30,31,32,33,34and35]

RATESOFPERSONALRELIEFSAND TAX

HEADB-RATES OF TAX

• 2.The corporaterate of taxshall be-
• (a) in the case of a resident company-

Rate in each twenty shillings

• (i)
• for theyearofincome1974andeachsubsequentyearofincome up to and including theyear of income19909.00
• (i)
• (ii)
• (iv)
• for theyearofincome19908.50
• for theyear ofincome 19918.00
• for theyearof income19927.50
• (V) for the year of income 1993 upto and including the year of income19977.00
• (vi) for theyear of income 1998up to and including theyear of income19996.50
• (vii)
• for theyear ofincome2000 andeach subsequentyear of income 6.00
• (viii) for theyearofincome2020andeachsubsequentyear ofincome 5.00
• (ix) for theyearofincome2021and eachsubsequentyearofincome. 6.00

Provided that this provision shall apply to the income earned

from the1stJanuary,2021.

Provided that for a resident company with an accounting period ending between the 1st July,1994 and the 30th June.1995 the corporation rate of tax shall be increased by one-half shilling in each twenty shillings

• In the case of a non-resident company having a permanent
• (b) establishment in Kenya-

Rate in each twenty shillings

• (i) for theyearofincome1974andeach subsequentyearofincome up to and including theyearof income198910.50
• (ii) for theyearof income199010.00
• (i
• for theyearof income19919.50
• (iv) for theyearofincome1992and eachsubsequentyearof Income
• 9.00
• V) for the year ofincome 1993 up to and including theyear of
• income19978.50
• (vi) for theyear of income 1998 up to and including 19998.00

• (vii) for the year of income 2o00 and each subsequentyear of income 7.50

(viii) for theyear of income2024 andeach subsequent year ofincome

6.00

Provided that for a non-resident company having a permanent establishment inKenya with an accountingperiod ending between the 1st July.1994 and the 30th June,1995,the corporation rate of tax shall be increased by one-half shilling in each twenty shillings-

• (f commercial activities shall be exempted frompaying any corporation tax for a period of ten years commencing with theyear in which production,sales or receipts relating to the activities for which that enterprise has been licensed as an export processing zone enterprise commence:butthecorporationrate of taxwill betwenty-fiveper cent
• for the periodof tenyears commencing immediately thereafter:

Provided that for purposes of this subparagraph,commercial activities"includes trading in,breaking bulk,grading,repacking or relabelingofgoodsandindustrialrawmaterials.

• (h) in the case of a special cconomic zone enterprise,whether the enterprise sells its products to markets within or outside Kenya developer andoperator,tenpercentfor thefirst ten yearsfrom date of firstoperation and thereafterfifteenpercentfor another tenyears;
• in the case of a company that constructed at least four hundred residential units annually.fifteen per cent for that year of income,
• subjectto approval by the CabinetSecretaryresponsibleforhousing

Provided that where a company is engaged inmultiple activities which include the ones specified in subparagraph (i),the rate of fifteen per cent shall be applied proportionately to the extent of the turnover arisingfrom thehousing activity.

• in the case of company whose business is local assembling of motor
• vehicles, fifteen per cent for the first five years from the year of commencementofitsoperations:

Provided that-

• (i) therateoffifteen percent shall be extended for a furtherperiod offiveyearsif thecompany achievesa local content equivalent tofiftyper cent ofthe ex-factory value of themotorvehicles;
• and
• (ii) in this paragraph,"local content"means parts designed and manufactured in Kenya by an original equipmentmanufacturer operatinginKenya.
• (m) in respect of a company engaged in business under a special operating framework arrangementwith the Government,therate oftax specified

• (o)
• (p)
• provided under the Agreement;
• in respect of a company operating a carbon market exchange or (n)
• Financial CentreAuthority.fifteen per cent for the first ten years from theyear of commencement of its operations:
• (na) in respect of a company certified by the Nairobi International Financial Centre Authority.fifteen per cent for the first ten years from the year of commencement of its operations and twenty per cent for
• the subsequent ten years of its operation where-
• the company invests at least three billion shillings in Kenya in
• (i) the first threeyears of operation;
• (ii)
• (ii) the regional headquarters of the company is in Kenya, at least sixty per cent of its employees in senior management are citizens of Kenya:
• the company is a holding company.at least seventy per cent of its employees in senior management are citizens of Kenya:and
• (nb) in the case of a start-up certified by the Nairobi International Financial
• per centfor the succeeding fouryears;
• in respect of a company operating a shipping business in Kenya. fifteen per cent for the first ten years from the year of commencement of its operations;
• in respect of a company undertaking the manufacture of human vaccines,ten per cent.
• 3.The non-resident tax rates shall be-
• (a) in respect of management or professional fees or training fees, consultancy. agency or contractual fee, twenty per cent of the gross sum payable:

Provided that-

• (i the rate applicable to any payments made by Special Economic
• Zone Enterprise,Developer orOperator toa non-resident person shall be5%of thegross amountpayable:
• the rate applicable to the citizen of the East African Community () Partner States in respect of consultancy fee shall be fifteen per cent of the gross sum payable:
• in respect of a royalty or natural resource income,twenty per cent of the gross amountpayable;
• (b)

Provided that the rate applicable to anyroyalty paid by any Special Economic Zone Enterprise,Developer or Operator to a non-resident person shall be5%of the gross amount payable;

• (c)
• (i) in respect ofa rentpremium or similar consideration for the use or occupation of immovableproperty,thirtyper centof thegross amount payable;
• (ii) in respect ofarent,premium or similar consideration for theuse ofproperty other than immovable property,fifteen per cent of the gross amount payable:
• (d)in respect of a dividend,fifteenper cent of the amount payable:

Provided that the rate applicable to citizens of the East African CommunityPartnerStates inrespectof dividend shall be fiveper cent ofthe gross sum payable:

• (e) (i) in respect of interest arising from a Government bearer bond of at least two years duration and interest and deemed interest, discount or original issue discount,fifteen per cent of the gross sum payable:
• (ia) in respect of interest and deemed interest arising from a bearer bond issued outside Kenya of at least two years duration and interest.discount or original issue discount,seven and a halfper cent of the gross sum payable;
• (ii) in respect of interest,arising from bearer instrument other than a Governmentbearerbond of at least two years duration,twentyfive per cent of the gross amount payable;
• (i) in respect of interest paid by any Special Economic Zone Enterprise,Developer or Operator to a non-resident persons,5% of thegross amount payable.
• (f) in respect of a pension or retirement annuity.five per cent of the gross amount payable;
• (g) in respect of an appearance at,or performance in,any place(whether part in any sporting event or otherwise diverting an audience.twenty per cent of the gross amount payable:
• (h) in respect of an activity by way of supporting,assisting or arranging paragraph,twenty per cent of the gross amount payable:
• (i) in respect ofwithdrawalsmade bypunters,fivepercent;
• (ia) in respect of interest and deemed interest arising from a bearer bond issued outside Kenya of at least two years duration and interest, discount or original issue discount,seven and a half per cent of the gross sum payable;

• (k) in respect ofgains orprofits from thebusinessof a ship-owner which is chargeable to tax under section 9(1) of the Act,two and a half per
• cent of thegross amount received:
• (D) in respect of gains and profits from the business of transmitting messages by cable or radio communication,optical fibre,television broadcasting,Very Small Aperture Terminal (VSAT),internet and satellite or any other similar method of communication which is chargeable to tax under section9(2).five per cent of the gross amount received:
• (n) in the case of a special economic zones enterprise. developer and operator in respect of payments other than dividends made to nonresidents at the rate of ten percent;
• an insurance or reinsurance premium,five per cent of the gross
• (p) amountpayable;
• (b) in the case of sales promotion.marketing,advertising services.and transportation of goods (excluding air and shipping transport services twentypercentof thegross amount:

Provided that with regard to transportation of goods,therate shall not be applicable to EastAfrican Community citizens;

• (r) in the case of gains from financial derivatives,fifteen per cent of such gains:
• (s)
• in the case ofrepatriated income undersection 7B,fifteen per cent;
• (t) in the case of digital content monetisation,twenty percent of the gross amount;
• (u)
• in respect of a payment made by a public entityfor supply ofgoods to the public entity,five per cent;
• V) in respect of income deemed to have accrued in orbeen derived from a digital marketplace,twenty per cent.
• 5.Theresident withholding taxrates shall be-
• (a) in respect of a dividend,fifteen per cent of the amount payable;
• (b)
• in respect ofinterest,discount or original issue discount arising from-
• (i) bearer instrument other than a Governmentbearer bond of at
• least twoyearsduration,twenty-fiveper cent:
• (ii) GovernmentBearerBondofat leasttwoyears duration and other
• sources,fifteen per cent;
• (ili) bearer bonds with a maturity of tenyears and above,ten per cent of the gross amount payable,of the gross amount payable;
• (C) in respect ofa commission or fee.paid or credited by an insurance
• company to any person for the provision,whether directly or

indirectly,of an insurance cover to any person or group ofpersons, five per cent of the gross amount payable to brokers,and tenpercent of the gross amount payable to brokers,and ten percent pfthe gross amountpayable to all others;

• (ii) inrespectofawithdrawalbefore theexpiryoftwentyyearsfrom the date ofjoinin thefundmade from a registeredpension fund, registered provident fund.the National Social Security Fund or a registered individual retirement fund in excess of the tax free amounts specified under section 8(4) and8(5) in any oneyear-

On allincomeoverKShs.388.00030%

• (ili)in respect of surplus funds withdrawn by orrefunded to an employer in respect of registered pension or registered provident funds,thirty per cent of the gross sumpayable;
• (e) in respect of a qualifying dividend,five per cent of the amount payable which is a final tax;
• (i) in respect of management or professional fee or training fee, other than contractual fee,the aggregate value of which is twenty-four thousand shillings in a month or more,five per cent of thegrossamount payable;
• (ii) in respect of contractual fee the aggregate value of which is twenty-four thousand shillings in a month ormore,threeper cent of the gross amount payable;
• (g) in respect of a royalty or natural resource income,fiveper centof the gross amount payable;
• (h) in respect ofqualifying interest-—
• ten per cent of the gross amount payable in the case of housing bonds:and
• (i) twentyper cent ofthegrossamountpayable in thecaseofbearer instrument;and
• (ili) fifteen per cent of the gross amountpayable in any other case;

Provided that the taxpaid under thisparagraph is a final tax.

• (i inrespect ofwithdrawalsmadebypunters,fivepercent:
• deleted by Act No.38of2016,s.17(e)(ii);
• (ja) in respect ofa rent,premium or similar consideration for the use or occupation of immovable property,seven point five percent of the gross amount payable;
• (jb) in respect to the disbursement of deemed income to beneficiaries undersection 1l(3)(c) therate of twenty five percent;

• (I1)
• (m)
• (n)
• in respect of payments for sales promotion,marketing,advertising services,fiveper centof thegrossamount;
• in respect ofpaymentsrelating to digital content monetisation,five per cent:
• in respect of a payment made by a public entityfor supplyofgoods to the public entity,zero pointfive per cent;
• (0) inrespectofincomedeemed to haveaccrued in orbeen derived from
• a digital marketplace,five percent.
• (p) deleted by Act No.9of 2025,s.30(d)(iv).
• 7.The rate ofpresumptive income tax in respect of agricultural produce under subsection (l) of section 17A shall be two per cent of the gross amount of payment or thegrossvalue ofexport.
• 8.Therate of advance tax under section 12A shall be-
• (a)

Provided that advance tax shall not be imposed on the tractors or trailersused for agriculturalpurposes;

• for vans.pick-ups.trucks.prime movers,trailers and lorries,two thousand five hundred shillingsper tonne of load capacity per year or five thousand shillings per year,whichever is higher;
• (b) for saloons, station-wagons.mini-buses. buses and coaches, one hundred shillings per passenger capacity per month or five thousand
• shillingsper year,whichever is higher;
• 9.The rate of turnover tax shall be one point five percent of the gross
• 10.The rate of tax in respect of residential rental income shall be seven point five percent of the gross rental receipts of a taxable resident person under section 6A.
• receipts of the businessof a taxable person under section 12C.

EighthSchedule to Cap.470,which it isproposed to amend-

EIGHTHSCHEDULE[ss.3and 15]

ACCRUALANDCOMPUTATIONOFGAINSFROMPROPERTY OTHERTHANINVESTMENTSHARESTRANSFERREDBY

INDIVIDUALS

• 2.Taxation of gains

Subject to this Schedule,income in respect ofwhich tax is chargeable under section3(2)(f)is-

• (a) the whole of the gains which accrued to a company.an individual or partnership on or after the 1st January,2015.on the transfer of property situated in Kenya.whether or not the property was acquired beforeIst January,2015.or

• (b) gains derived from the alienation of shares or comparable interests, including interests in a partnership or trust,if,at any time during the three hundred and sixty-five days preceding the alienation,the shares or comparable interests derived more than twenty per cent of their value directly or indirectly from immovable property situated in Kenya,or
• (C) gains,other than those to which subparagraph (a) applies, derived from the alienation of shares of a company resident in Kenya if the alienator,at any time during the three hundred and sixty-five days preceding such alienation.held directly or indirectly at least twenty per cent of the capital of that company:

Provided that for the purposes of this paragraph,the person alienating change of at least twenty per cent in the underlying ownership of the

the shares shall notify the Commissioner in writing where there is a property.

NinthSchedule to Cap 470,which itisproposed to amend-

NINTH SCHEDULES.23]

TAXATION OFEXTRACTIVEINDUSTRIES

PARTII-MINING OPERATIONS

• 2.Taxation of licenses
• (1)A licensee is subject to taxin accordance with this Actbut subject to the modificationsin this Schedule.
• (2) Where there is any inconsistency between this Schedule and any other provision of this Act regarding the taxation of a licensee,this Schedule shall prevail.
• (3)The corporate rate specified under paragraph 2of Head B of the Third Schedule shall be the rate of income tax applicable to a licensee that is a company.
• 7.Taxation of contractors
• (1) A contractor is subject to tax in accordance with this Act but subject to the modifications in thisSchedule.
• (2)If there is any inconsistency between this Schedule and any other provision the Act,in relation to the taxation of a contractor,this Schedule shall prevail.
• (3) Therate ofincome taxapplicable to a contractor is-
• (a) in the case ofa resident company,thirty per cent;or
• (b) in the case of a non-resident company,thirty seven and a half per cent.

Section2ofCap.476,whichit isproposed toamend-

Interpretation

"assessment"means-

• (a)
• a self-assessmentreturn submitted under section45:
• (b) an assessment made by the Commissioner under section 45:or
• (c) an amended assessmentunder section 46:

"information technology"means any equipment or software for use in

storing.retrieving.processing or disseminating information:

storing,retrieving,processing or disseminating informationrelating to tax;

Taxablevalue of supply

Section13of Cap.476,whichi1isproposed toamend-

• (1)Subject to this Act,the taxable value of a supply,including a supply of
• imported services,shall be-
• (a)
• (b)
• the consideration for the supply;or
• if the supplier and recipient are related.the open market value of the supply.
• (3) Subject to subsections (4) to (6). the consideration for a supply
• the amount in money paid or payable, directly or indirectly.by any
• including a supply ofimportedservices,shall be the total of-
• (a) person,for the supply:or
• (b) the open market value at the time of the supply of an amount in kind paid or payable,directly or indirectly.by any person,for the supply: and
• (C) any taxes.duties,levies,fees.and charges (other than value added tax) paid or payable on,or by reason of the supply.reduced by any discounts or rebates allowed and accounted for at the time of the supply
• (4) The consideration for a supply shall include the amount charged for-
• are supplied;
• (a) any wrapper,package,box,bottle.or other container in which goods
• any other goods contained in or attached to the wrapper.package,box,
• (b) bottle or other container referred toinparagraph (a);or
• (c) any liability that thepurchaser hasto pay to thevendor byreason of or
• (5) In calculating the value of any services for the purposes of subsection
• in respect of the supply in addition to the amount charged asprice.
• (1),there shall be included any incidental costs incurred by the supplier of the services in the course ofmaking the supply to the client:

Provided that,if the Commissioner is satisfied that the supplier hasmerely made a disbursement to a third party as an agent of his client, then such disbursementshall beexcluded from the taxablevalue.

• (6)The consideration for a supply shall not include-
• (a) in the case of a supply of goods under a hire purchase agreement,any financial charge payable in relation to a supply ofcredit under the agreement:or
• (b) any interest incurred for the latepaymentofthe consideration for the supply.
• (7)The consideration for a supply ofaccommodation or restaurant services shall not include the Tourism Levy imposed on the supply under the Tourism Act (Cap.381).any service charge paid in lieu of tips:

Provided that this subsection shall only apply in respect of service charge where-

• (a) the service charge is distributed directly to the employees of the hotel or restaurant in accordance with a written agreement between the employer and the employee;and
• (b) the service charge does not exceed ten per cent of the price of the
• service,excluding such service charge.
• (8)For the purposes of thisAct,a person is related to another person if-
• (a) either person participates,directly or indirectly,in the management,
• control or thecapital of the business of the other:
• b) a third person participates,directly or indirectly.in the management. controlor capital ofthebusinessofboth;or
• (C) an individual who participates in the management,control or capital of the business of one,is associated by marriage.consanguinity or affinity to an individual who participates in the management,control or capital of the business of the other.

Section31ofCap.476,whichitisproposedtoamend-

Refund of tax on bad debts

• (1)Where a registered person hasmade a supply and has accounted for and paid tax on that supply but hasnotreceived any paymentfrom the person liable topay the taxon that supply and thatperson-
• (a)hasnot received any payment from the person liable to pay the tax,he
• may.after a period of twoyearsfrom thedate of the supply;or
• (b) the person to whom the supply was made has been placed under statutory management through the appointment of an administrator, receiver,or liquidator.he may apply to the Commissioner for refund of the taxinvolved:

Provided that-

• (a)
• no application for a refund shall be made under this section after the expiry of tenyearsfrom the date of supply;
• (b) the refund shall bemade in compliancewith section 47(5) of the Tax Procedures Act
• (C) the amounts may be credited to the taxpayer's record for use against futurevalue added tax liabilities;
• (ca) the amount may be used to offset any other value added tax liability, upon approval by the Commissioner.
• (2)Where the tax refunded under subsection(l) is subsequently recovered from the recipient of the supply.the registered person shall refund the tax to the Commissionerwithin thirty daysof the date of therecovery.
• (3) If payment is not made within the time specified under subsection (2), an interest oftwo per centpermonth orpart thereofof the taxrefunded shall forthwithbe due andpayable:

Provided that the interest payable shall not exceed one hundred per cent of therefunded amount.

Section42of Cap.476.whichitisproposed toamend-

Tax invoice

• (1) Subject to subsection (2).a registered person who makes a supply shall, at the time of the supply furnish the purchaser with the tax invoice containing the

2. prescribed details for the supply. 3. (2)No invoice showing an amount which purports to be tax shall be issued 4. on any supply- 5. (a) 6. which is not a taxable supply:or 7. (b)by a person who is not registered.

• (3) Any person who issues an invoice in contravention of this subsection

9. commitsan offence and any tax shown thereon shall become due and payable to the Commissionerwithinseven days ofthe date oftheinvoice. 10. (4) A registered person shall issue only one original tax invoice for a taxable supply,or one original credit note or debit note,but a copy clearly marked as such may beprovided to aregisteredperson who claims to have lost the original.

Section66of Cap.476,whichit isproposed toamend-

Tax avoidance schemes

• (1) Notwithstanding anything in this Act,if the Commissioner is satisfied that-
• (a)a scheme has been entered into or carried out;

• (b)a person has obtained a tax benefit in connection with the scheme;and
• (C) having regard to the substance of the scheme,it would be concluded that aperson,or oneof thepersons,who entered intoor carried out the scheme didso for thesoleor dominantpurposeofenablingtheperson referred to in paragraph (b) to obtain a tax benefit,the Commissioner may determine the tax liability of the person who obtained the tax benefit asif the scheme had notbeen entered into or carried out.
• (2)If a determination is made under subsection(1),the Commissioner shall issue anassessmentgiving effectto the determination.
• (3)A determination under subsection (l) shall be made within five years from thelast dayof the taxperiod towhichthedeterminationrelates.
• (4)In thissection-

"scheme"includes a course of action,and an agreement.arrangement, promise,plan,proposal,or undertaking,whether expressorimplied,and whether ornot legally enforceable:and"tax benefit"means-

• (a) a reduction in the liability of a person to pay tax;
• (b) an increase in the entitlement of a person to a deduction forinput tax:
• (c) an entitlement to a refund:
• (d) apostponement of a liabilityforthepayment of tax;
• (e) an acceleration ofan entitlementto a deduction for input tax:
• any other advantage arising because of a delay in payment of tax or an acceleration of the entitlement to a deduction for input tax;
• anything that causes a taxable supply or taxable iimport not to be a taxable supply or taxable import,as the case maybe:or
• (h) anything thatgives rise to a deduction for input tax for an acquisition or import that is used or is intended to be used other than in making taxable supplies.

FirstSchedule1oCap.476,whichitisproposedtoamend-

FIRSTSCHEDULE[S.2(1))

EXEMPTSUPPLIES

PARTI-GOODS

SECTIONA

The supply orimportation of thefollowinggoods shall be exempt supplies

• 49.All goodsandparts thereofofchapter88;
• 51.Taxable goods,imported or purchased for direct and exclusive use in the implementation ofofficial aid fundedprojects excludingfuels,lubricantsand

tyres for vehicles upon approval by the Cabinet Secretary responsible for the

National Treasury.

• 58.Direction-finding compasses,instruments and appliances for aircraft.
• 62.Taxable goods for direct and exclusive use for the construction of tourism facilities,recreational parks of fifty acres or more.convention and conference facilities upon recommendation by the Cabinet Secretary responsible for mattersrelating torecreational parks.

For the purposes of this paragraph,recreational parks"means an area or a

building where a person can voluntarily participate in a physical or mental activity for enjoyment,improvement of general health.well-being and the developmentofskills.

• 89.Any other aircraft spare parts imported by aircraft operators orpersons
• engaged in the business of aircraft maintenance upon recommendation by the competent authorityresponsible for civil aviation.

99. Goods imported by passengers arriving from places outside Kenya,

• subject to thelimitations and conditionsspecified asfollows-
• (a) the goods shall be-
• (i)
• the property of and accompanying the passenger;
• (ii) for the personal or household use of the passenger inKenya:and
• (ili)
• of suchkinds and in such quantities as the proper officer may allow;
• (b) notwithstanding subparagraph (c),the following goods shall not be exempt under this item-
• (i) alcoholic beverages of all kinds.perfumed spirits and tobacco and
• manufactures thereof,except as provided in subparagraphs (f) and (g);
• i fabricsin the piece:
• (il) motor vehicles except,as provided in subparagraphs (c) and (d):and
• (iv)
• any trade goods,orgoods for supply or disposal to other persons:
• (C) subject to subparagraphs (a) and (b).the following goods may be exempted under thisitem when imported asbaggage by a person on first arrival or by a returning resident of Kenya whom the proper officer is satisfied is bona fide changing residence from a place outsideKenya to a place within Kenya-
• (i) wearing apparel;
• (ii) personal and household effects of anykind which were in his personal
• or household use in his former place ofresidence;and
• (ii) one motor vehicle,(excluding buses and minibuses of a seating
• capacity of more than 13 passengers and load-carrying vehicles of a

personally owned and used outsideKenya for at least twelve months (excluding theperiod of thevoyage in thecase of shipment):

Provided-

• i) the person has attained the age ofeighteenyears:and

2. (ii) where the person has previously been granted exemption under this paragraph.any subsequent exemption shall not apply unless such person hasused themotorvehiclesoimported intoKenya for aperiod ofnotless than fouryears,and taxhas been paid for the motor vehicle upon which exemptionhadpreviously been granted; 3. (i) where the returning resident has owned and used a left-hand drive vehicle for at least twelvemonths the personmay sell thevehicle and import a righthand drive vehicle ofwhose currentretail sellingprice doesnotexceed that of thepreviously owned lefthand-drivevehicle, subjectto thefollowingconditions- 4. (A)the person shall provide proof ofownership and use of thepreviously owned left-hand-drivevehiclein thecountryofformerresidencefora period of at least oneyear prior to thereturn; 5. (B) the person shall provide proof of disposal of the previously owned left-handdrive vehicle before changing residence:and 6. (iv) subparagraph (ii) shall only apply to residents returning from countries thatoperate LeftHand Drivemotorvehicles: 7. (P) subject to subparagraphs (a) and (b) the following goods may be whom the proper office is satisfied is making a temporary visit not exceeding three months toKenya- 8. (i non-consumable goods imported for his personal use during his visitwhichheintends to take outwithhimwhenheleavesat the end of hisvisit; 9. (ii) consumable provisions and non-alcoholic beverages,in such quantities and of such kinds as are,in the opinion of the proper officer,consistentwith hisvisit:and 10. goods imported by a returning resident,being an employee of an international organization the headquarters of which are in Kenya,and who has been recalled for consultations at the organization'sheadquarters; 11. (e) subject to subparagraphs (a) and (b),the following goods may be exempted under this item imported as baggage by a person who the proper officer is satisfied is a resident ofKenya returning from a visit outside Kenya and who is not changing residence in accordance with subparagraphs(c) and(d)- 12. (i) wearing apparel;

• (ii) personal and household effects which have been in his personal or household use.
• (f) subject to subparagraph (a) and (b),tax shall not be levied on the following goods imported by,and in the possession of a passenger-
• G spirits (including liquors) or wine,not exceeding one litre or
• wine not exceeding two litres:
• (ii) perfume and toilet water not exceeding in all one half litre,of whichnotmore than a quartermay beperfume:and
• cigarettes,cigars,cheroots,cigarillos,tobacco and snuff not
• (il) exceedingin all250grams inweight:

Provided that the tax free allowance under this subparagraph shall be granted only to passengers who have attained the age of

eighteen years:

• (g) subject to subparagraphs(a) and (b)-
• i) the exemption granted in accordance with subparagraphs (c).(d) ninety days of the date,of arrival of the passenger or such further period,not exceeding three hundred and sixty days from such
• arrival,as the Commissioner may allow:and
• (i) the tax free allowances granted in accordance with subparagraph (f) shall not be allowed in respect of goods specified in the paragraph imported in unaccompanied baggage:
• (h)where anyperson grantedexemptionunder
• whohasbeen subparagraphs (c) or (d) changes his residence to a place outside Kenya withinninety days from the date ofhis arrival.he shall export his personal or household effects within thirty days,or such further period.not exceeding sixty days from the date he changes such residence to a place outside Kenya.as the Commissioner may allow, otherwise tax shall become due and payable from the date of importation:and
• (i) subject to paragraphs(1) and (2).goods up to the value of three hundred United States Dollars for each traveller in respect of goods,other than goods referred to in paragraph (9). shall be exempted when imported by the traveller in his or her accompanied baggage.or upon his or her person and declared by him or her to an officer.provided that the person has been
• outsideKenya for aperiod in excess of twenty-four hours.
• 109.Goods imported or purchased locally for the direct and exclusive use in the construction ofhouses under an affordable housing scheme approved by the Cabinet Secretary on the recommendation of the Cabinet Secretary responsible formatters relating to housing.

153.The supply of denatured ethanol of tariff number 2207.20.00.

PARTII-SERVICES

The supply of thefollowingservices shall be exempt supplies-

• 1.The following financial services-
• (b)the issue,transfer,receipt or any other dealing with money,including money transfer services,and accepting over the counter payments of household bills, but excluding the services of carriage of cash, restocking of cash machines.sorting or counting of money;
• 25.The servicesof tour operators,excludingin-house supplies
• 26.Taxable services for direct and exclusive use for the construction of tourism facilities,recreational parks of fifty acres or more,convention and conference facilities upon the recommendation by the Cabinet Secretary responsible formattersrelating torecreational parks.

SecondscheduletoCap.476,whichitisproposed toamend-

SECONDSCHEDULE[S.7(2)] ZERO-RATING

PARTA-ZERO RATEDSUPPLIES

Where the following supplies,excluding hotel accommodation,restaurant or entertainment services where applicable,take place in the course of a registered person's business.they shall be zero rated in accordance with the provisions of section 7-

• 11.Inputs or raw materials(either produced locally or imported) supplied to pharmaceutical manufacturers in Kenya for manufacturing medicaments,as approved from time to time by the Cabinet Secretary in consultation with the Cabinet Secretaryresponsibleformattersrelating tohealth.
• 21.Transportation ofsugarcanefromfarms to millingfactories.
• 29.The supply of locally assembled andmanufacturedmobile phones.
• 30.The supply of motorcycles of tariff heading8711.60.00.
• 31.The supply ofelectricbicycles.
• 32.The supply ofsolar and lithium-ionbatteries.
• 33.The supply of electricbuses of tariff heading87.02.
• 34.Inputs or raw materials locally purchased or imported for the
• manufacture ofanimal feeds.
• 35.Bioethanol vapour(BEV)Stoves classified under HS Code 7321.12.00 (cooking appliances andplatewarmersforliquidfuel).

Section2of Cap.472,whichitisproposedtoamend

Interpretation

• (1) In this Act,unless the context otherwise requires-

"importmeans to bring or cause goods to be brought into Kenya from a foreign country,a specialeconomic zone or an export processing zone;

Section6of Cap.472,whichit isproposedto amend-

Timing of liability for excise duty

• (1) The liability ofa licensed manufacturer for excise duty on excisable

2. goods manufactured in Kenya shall arise at the time ofremoval of the goods from the manufacturer'sfactory.

• (2) For the purposes of this Act,excisable goods that are consumed in a

4. licensed manufacturer's factory shall be treated as removed from the factory at the time of consumption. 5. (3) The liability of a licensed person for excise duty on excisable services shall ariseat the time of the supply of the services.

• (4) The liability of an importer forexcise duty onexcisable goodsimported intoKenya shall arise-

7. (a) 8. as may be specified by the Cabinet Secretary by notice in the gazette; or 9. forpetroleum products,at the time of importation or such other time 10. (b) 11. for any other excisable goods,at the time of importation. 12. (5)A licensed person shall pay the liability for excise duty arising under 13. subsection(1) or (3),as the case may be,in accordance with section 36. 14. (6)An importer shall discharge theliability forexcise duty referred to in subsection(4)in accordancewith section36.

Section36of Cap.472,whichit isproposed1o amend-

Payment of excise duty

• (1) The excise duty payable by a licensed manufacturer in respect of

2. excisable goodsremovedfrom amanufacturer'sfactoryduringa calendarmonth shall bepaid not later than thetwentieth dayof the succeedingmonth. 3. (lA) Despite subsection (l),in the case of a licensed manufacturer of 4. alcoholic beverages,excise duty shall be payable to the Commissioner within by the fifth day of the followingmonth upon removal ofthe goods from the stockroom. 5. (2)The excise duty payable by a supplier of excisable services inrespect of supplies of excisable servicesmadeby the supplier during a calendar month shall bepaidnotlater than the twentiethdayof the succeedingmonth.

• (3) The excise duty payable by an importer in respect of the importation of excisable goods into Kenya shall be paid to the Commissioner at the time of importation.

• (4) For the purpose of assessing,collecting,accounting and enforcing the paymentofexcise duty on the importation ofgoodsintoKenya,theEastAfrican Community Customs ManagementAct,2004 shall apply as ifexcise duty were customs duty:

Provided that-

• the Tax Procedures Act (Cap.469B),shall apply with regard to
• (a) imposition ofinterest and penalties:and
• (b) in cases where interest becomes payable it shall not,in aggregate exceed theprincipal tax.
• (5)The Commissioner shall pay into the Sports, Arts and Social DevelopmentFund established under the PublicFinance ManagementAct(Cap. 412A),to support social development including universal health care sixteen percent of the excise duty paid in respect of money transfer by cellular phone serviceproviders.

First ScheduletoCap.472,which itisproposed toamend-

FIRSTSCHEDULE[S.5(2)] RATES OF EXCISEDUTY

PartI-EXCISABLE GOODS

• 1.Subject to paragraph 2,the rates of excise duty on excisable goods are as set out in thefollowing table:

Imported cellularphones

%01

Fruit juices (including grape must),and vegetable juice,unfermented and

not containing added spirit,whether or not containing added sugar or other sweetening matter Shs.14.14per litre

Bottled or similarly packagedwaters and othernon-alcoholicbeverages.not

including fruit orvegetable juices. Shs.6.41per litre

Beer,Cider,Perry,Mead.Opaque beer and mixtures of fermented

• beverages with non-alcoholic beverages and spirituous beverages of alcoholic strengthnot exceeding 6% KSh.22.50 percentilitreofpure alcohol:

Provided that,Beer,cider.perry,mead,opaque beer and mixtures of fermented beverages with nonalcoholic beverages and spirituous beverages manufactured by licensed small independentbrewers shall be subject to the rate of"KSh 10 per centilitre ofpure alcohol;

Cigars,cheroots,cigarillos,containing tobacco or tobacco substitutes Shs.

16,260.29perkg

Other manufactured tobaccoand manufactured tobacco substitutes;

"homogenous"and reconstituted tobacco";tobacco extractsand essences Shs.11,382.48perkg Imported sugar confectionary of tariff heading 17.04: KSh.85.82per kg Imported Articles of plastic of tariff heading 3923.30.00 and 3923.90.90 10%

Imported Ceramic sinks,wash basins.wash basin pedestals,baths.bidets. water closet pans,flushing cisterns,urinals and similar sanitary fixtures of tariff heading69105%of customvalue orKSh.50per kg

Imported furniture of tariff heading 9403 excluding furniture originating

from East African Community Partner States that meet the East African Community Rules of Origin 30%

Imported plates of plastic of tariff heading 3919.90.90,3920.10.90, 3920.43.90.3920.62.90and 3921.19.90 butexcluding those originating from EastAfrican CommunityPartner States thatmeet the EastAfrican Community RulesofOrigin25%orKSh.200perkilogramme,whicheverishigher

Importedpaper or paper board,labelsof allkindswhether or not printed of tariffheading 4821.10.00and 4821.90.00butexcluding thoseoriginatingfrom East African Community Partner States thatmeet theEastAfrican Community RulesofOrigin25%orKsh200perkilogramme.whicheverishigher

Importedprinting ink of tariff 3215.11.00 and 3215.19.00 butexcluding those originating from EastAfrican Community PartnerStates that meet the East African CommunityRulesof Origin 15% Imported Ceramic

Imported Float glass and surface ground or polished glass,in sheets, whether or not having an absorbent,reflecting or non-reflecting layer.but not otherwise worked of tariff 7005 but excluding those imported by a registered processor upon the recommendation by the Cabinet Secretary responsible for matter relating to industry and those originating from EastAfrican Community PartnerStates thatmeet the EastAfrican Community Rules of Origin35%of

excisablevalue orKsh500 per square meter whicheverishigher.

Imported other self-adhesive plates,sheets,film,foil,tape,strip and other flat shapes.ofplastics.whether or not in rolls of tariff number 3919.90.90,but excluding those originating from East African Community Partner States that meet theEast African Community Rulesof Origin.25% ofexcisable value or Kshs.200 perKilogramme,whichever is higher.

Importedprintedpolymers ofethyleneofotherplates.sheets.film,foil and strip,ofplastics,noncellularandnotreinforced,laminated,supportedorsimilarly combined with othermaterials of tariff number3920.10.90,but excluding those originating from East African Community Partner States that meet the EastAfrican Community Rules of Origin. 25%ofexcisablevalueorKshs.200 perKilogramme,whichever is higher.

Imported printed polymers ofvinyl chloride containing by weight not less than 6% of other plates,sheets,film,foil and strip,of plastics,noncellular and notreinforced,laminated,supportedor similarly combinedwith othermaterialsof tariff number 3920.43.90.but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin.25%ofexcisablevalueorKshs.200perKilogramme,whicheverishigher Imported printed poly (ethylene terephthalate) of polycarbonates,alkyd resins,polyallylesters or other polyesters of other plates,sheets,film,foil and strip,ofplastics,noncellularandnotreinforced,laminated,supportedorsimilarly of tariffnumber3920.62.90,butexcluding those originating fromEastAfrican Community Partner States that meet the East African Community Rules of Origin.25% of excisable value or Ksh.200 per Kilogramme,whichever is higher Imported printed cellular ofother plastics of other plates,sheets,film,foil and strip of tariffnumber 3921.19.90,but excluding those originating fromEast African Community Partner States thatmeet the East African Community Rules of Origin.25% of excisablevalueorKshs.200 perKilogramme,whichever is higher.

Printed self-adhesive paper of tariff number 4811.41.90,but excluding

those originating from EastAfrican CommunityPartnerStates thatmeet theEast African Community Rulesof Origin.25%ofexcisable value or Ksh.200 per Kilogramme.whichever ishigher.

Gummedpaper andpaperboardoftariffnumber4811.49.00butexcluding thoseoriginatingfrom East African Community PartnerStates thatmeetthe East 25%ofexcisablevalue orKsh.200per

African Community Rules of Origin. Kilogramme,whichever is higher.

Imported Uncoated kraft paper and paperboard,in rollsor sheets:kraftliner; unbleachedoftariffnumber 4804.11.00 butexcludingthoseoriginatingfrom

East

African Community Partner States thatmeet the EastAfrican Community Rulesof Origin25%ofexcisablevalueorkshs.50 perkilogramme,whichever is higher.

Imported otherkraft paper or paperboardweighing 150g/m2 or less,inrolls or sheets:unbleached of tariffnumber 4804.31.00 but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin 25%ofexcisable value or kshs.50 per Kilogram,whichever is higher

Imported otherkraftpaperorpaperboardweighingmore than150g/m2but less than 225g/m2,in rolls or sheets;unbleachedof tariffnumber4804.41.00but excluding those originating from East African Community Partner States that meettheEastAfrican CommunityRulesofOrigin 25%ofexcisablevalue or kshs.50perKilogram.whicheveris higher.

Imported Glass of heading 70.03,70.04 or 70.05,bent,edge-worked, engraved,drilled.enamelled or otherwise worked,but not framed or fitted with other materials ofTariff Heading 70.06,but excluding those from East Africa CommunityPartnerStates thatmeet the East Africa CommunityRulesof Origin. 35%of excisablevalue orKshs.500per squaremetre,whicheverishigher Imported safety glass of tariff numbers 7007.19.00and 7007.29.00 but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin.35%ofexcisablevalueor Kshs.500 per squaremetre,whicheverishigher Imported Multiple-walled insulating units ofglass of Tariff Heading 70.08, butexcluding those from East Africa Community Partner States thatmeet the EastAfrica CommunityRules of Origin35%ofexcisablevalue orKshs.500per squaremetre,whicheverishigher Spirits of undenatured extra neutral alcohol of alcoholic strength exceeding 90% purchased by licensed manufacturers of spirituous beverages.Ksh.500 per litre

PartII-EXCISABLESERVICES

• 4A.Excise duty on betting shall be five percent on the amount deposited
• into a customer's bettingwallet:

Provided that this paragraph shall not apply to horse racing.

• 4B.Excise duty on gaming shall be five per cent on the amount deposited into a customer's gaming wallet.
• 9.Excise duty on fees charged on virtual assets transactions byvirtual asset
• providersshall be tenpercentof the excisablevalue.

PARTIII-INTERPRETATIONOFSCHEDULE

"amount deposited into a customer's betting walletmeans the amount of money transferred by a customer into the customer wallet maintained by a licensed betting andgaming operator for betting and gamingpurposes:

SecondscheduletoCap472,which it isproposed to amend-

SECONDSCHEDULE[S.7(1)(a)]

EXEMPTEXCISABLEGOODSANDSERVICES

PARTA-EXEMPTEXCISABLEGOODS

The following excisable goods shall be exempt from excise duty when

• 11.All goods including materials supplies,equipment,machinery and motor vehicles for the official use by the Kenya Defence Forces,the Defence ForcesWelfareServices and theNational PoliceService.

purchased before clearance through Customs orremoval from excise control-

Section3ofCap.469B,whichitisproposed toamend-

Interpretation

• (1) In this Act,except wherewhen the context otherwise requires-

"certificate oforiginmeans an official document issued by a competent

authority of the governmentof the source country which certifiesthat the goods being imported intoKenya were manufactured in that particular source country;

Section6A of Cap.469B,whichit isproposedto amend-

International tax agreements

• (1)Any multilateral agreements and treaties that have been entered into by oronbehalfofthe GovernmentofKenyarelating to international taxcompliance andprevention of evasion of taxorexchangeof information on taxmattersshall have effect in themanner stipulated in such agreements or treaties.
• (2)Notwithstanding any other provision of this Act or any other written law,the information obtained pursuant to agreements specified under subsection (1) shall not be disclosed except in accordance with the conditions specified in the agreements.

(3) Any multilateral agreement or treaty that hasbeen entered into by or on behalfof the Government ofKenya relating to mutual administrative assistance in the collection of taxes shall have effect in the manner stipulated in such agreement or treaty.

• (4) A provision in any multilateral agreement or treaty that hasbeen entered into byor on behalf of the Government of Kenya,or made pursuant to such agreement or treaty,relating to the imposition ofimport duty on-

2. (a) imported steelbillets of tariffheading 7207.11.00:and 3. (b) importedwirerodsof tariffheadings7213.91.00 and 7213.91.90.

shall not applyfor a period of twoyearsfrom the commencement of this subsection,or for such other longer period as the Cabinet Secretary may,by notice in the Gazette.prescribe.

Section 10ofCap.469B,which it is proposed1o amend

Deregistration

• (1) A person who ceases to be required to be registered for the purposes of a tax law shall apply to the Commissioner for deregistration under that specific tax law.

2. (2)A registered person shall apply for deregistration under subsection (1)- 3. (a) in the prescribed form:and 4. (b) within thirty days of ceasing to be required tobe registered under that taxlaw. 5. (3)Where a tax lawrequires a registered person to apply for deregistration in addition to therequirement under this section,that person shall also apply for deregistration in accordancewith theprovision of that tax law. 6. (4) The Commissioner shall notify in writing a registered person of the deregistration of thatperson if the Commissioner issatisfied that theperson is no longerrequired toberegistered for thepurposeof a tax law.

• (5) The Commissioner may.on his or her own motion and by notice in writing to a person or a person's tax representative,deregister the person when satisfied that the person is eligible for deregistration,including when the person is a natural person who has died,a company that has been liquidated,or any other person that has otherwise ceased to exist.
• (6)A person shall cease to be a registeredperson on the date ofnotification by theCommissioner inrelation to the deregistration.
• (7) Where the Commissioner fails to respond to the application for deregistration within six months, the applicant shall be deemed to be deregistered.
• (8)Where the deregistration of a person requires the cancellation of that person'sregistration or licence under a tax law,that registration or license shall be cancelled on the effective date of the deregistration.

Section12of Cap.469B,which it isproposed toamend-

Issueofa PIN

• (1) The Commissioner shall issue a PiN to a person registered under section 8.

2. (2)A registered person shall use a PIN for the purposes of all tax laws and a 3. registered person shall be issued with only onePIN at any time. 4. (3)A person who hasnot beenregistered under scction 8 but who requires a PIN for the purposes ofa transaction specified in theFirst Schedule may apply to 5. the Commissioner fora PiN. 6. (4)An application for a PIN under subsection(3) shall be- 7. (a) 8. in theprescribed form:and 9. (b) accompanied by documents that the Commissioner may require, including documents ofidentity or registration. 10. (5) The Commissioner shall issue a PiN to an applicant under subsection (3) if the Commissioner is satisfied that the applicant requires a PIN for the purposes of a transaction specified in the First Schedule. 11. (5A) The Commissioner may,upon receipt of an application made by or on behalf of any person or class ofpersons,exempt such person or class of persons from the requirement for a PiN for any of the transactions specified in the First Schedule. 12. (6)A PINis issued to apersonwhen the Commissionernotifiesthatperson in writing of theissuance of thePIN.

Section37Eof Cap.469B,which it isproposed toamendCommissioner to refrain from recovering interest,penalties or fines

• (1) Notwithstanding any other provision of this Act,the Commissioner shall refrain from recovering penalties or interest or fines on tax debt where a person shall havepaid all the principal tax due before the31st December,2023.
• (2) Where all the principal tax due shall not have been paid before the 31st December.2023,the person from whom the tax is due shall apply to the Commissioner for an amnesty of interest,penalties or fines on the unpaid tax, andpropose a payment plan for theoutstandingamount.
• (3)For the purposes of subsection (2)-
• (a) the amnesty shall be on interest,penalties or fines on the unpaid tax that have accrued up to the31st December,2023;
• (b) the amnesty shall only be granted once,if the person-
• (i) not later than the 30th June,2025;
• (ii) does not incur a further tax debt;and
• (il) gives a written undertaking for the settlement of all outstanding taxes that the person may owe.
• (4) Despite subsection (2),where a person haspaid part of the principal tax due as on the 31December.2023,and has been granted amnesty on the unpaid principal tax,and interest,penalties and fines thereon,any amount that remains unpaid on the 30th June,2025,shall attract interest and penalties for which no amnesty shall be granted.

Section39A of Cap.469B,itisproposed to amend-

Penalty for failure to deduct or withhold tax

• (1)Where a person who is required under a tax law to deduct or withhold tax and remit the tax to the Commissioner fails to do so,the provisions of this Act relating to the collection and recovery of tax,and the payment of penalties and interest thereon,shall apply to the collection and recovery of that tax not deducted orwithheld as if it were tax due andpayableby thatperson and the due datefor thepayment shall be the date on which the amount of tax should have been remitted to the Commissioner.
• (2) Despite subsection (1),a person who does not deduct,withhold or remit tax on a payment shall not be required to pay the principal tax not deducted. withheld or remitted where therecipient of the payment haspaid and accounted for thefull principal tax and thetaxnot deducted,withheld orremitted.

Section42ofCap469B,whichit isproposed1oamend-

Power to collect taxfrom person owingmoney to a taxpayer

• (1) This section applies when a taxpayer or a non-resident person who is subject to tax inKenya is,or will become liable to pay a tax and-

2. (a)the tax is unpaid tax;or

• (b)
• the Commissioner has reasonable grounds to believe that the taxpayer will notpay the taxby the due datefor thepayment of the tax.
• (2) The Commissioner may,in respect of the taxpayer or the non-resident person who is subject to tax in Kenya and by notice in writing,require a person (referred to as the"an agent")-
• (a) who owesormay subsequentlyowemoney to the taxpayer or thenon-
• resident person who is subject to tax inKenya:
• (b) who holds or may subsequently hold money.for or on account of.the
• taxpayer or thenon-resident person who is subject to tax inKenya;
• (c) who holds or may subsequently hold money on account of some other personforpayment to the taxpayer or thenon-residentpersonwho is subject to tax inKenya:or
• (d) who has authority from some other person to pay money to the taxpayer or the non-resident person who is subject to tax in Kenya.to pay the amount specified in the notice to the Commissioner, being an amount that shall not exceed the amount of the unpaid tax or the amountoftaxthattheCommissionerbelieveswillnotbepaidby the taxpayer or the non-resident person who is subject to tax in Kenya by
• the due date.
• (3) When a notice served under subsection (2) requires an agent to deduct a
• specified amount from a payment of a salary.wages or other similar remunerationpayable atfixed intervals to the taxpayer orthenon-residentperson who is subject to tax in Kenya.the amount required to be deducted by an agent from each payment shall not exceed twenty per cent of the amount of each payment of salary,wages,or other remuneration (after the payment of income tax).
• (4) This section shall apply to a joint account when-
• (a) all the holders of thejoint account have unpaid tax liabilities:or
• (b) the taxpayer or the non-resident person who is subject to tax in Kenya can withdraw funds from the account (other than a partnership
• account) without the signature or authorisation of the other account holders.
• (5) An agent shall pay the amount specified in a notice under subsection
• (2) by the date specified in the notice,being a date that that does not occur before the date that the amountowedby the agent to the taxpayerornon-residentperson who is subject to tax in Kenya.becomes due to the taxpayer or non-resident person who is subject to tax in Kenya.or held onbehalf of the taxpayer or nonresidentpersonwhoissubjectto tax inKenya:
• (6)When an agent who has been served with a notice under subsection (2) fails to comply with the notice byreason of a lack ofmonies held by an agent on behalf of,or due by an agent to the taxpayer or the non-resident person who is
• subject to tax inKenya.an agent shall notify the Commissioner in writingwithin

fourteen days of receiving the notice, setting out the reasons for an agent's inabilitytocomply

• (7) When the Commissioner is notified by an agent under subsection (6) that an agent is unable to pay the amount due,the Commissioner shall within a period of thirty days.in writing to the agent-

2. (a) accept the notification and cancel or amend the notice issued under subsection(2):or 3. (b) reject the notification. 4. (8) The Commissioner shall notify the agentin writingofa revocation or amendment of a notice given under subsection(2) where the taxpayer or the nonresidentpersonwho is subject to tax inKenya pays thewhole orpart ofthe tax due or has made an arrangement satisfactory to the Commissioner for the payment of the tax.

• (9) The Commissioner shall serve the taxpayer or the non-residentperson who is subject to tax in Kenya with a copy of a notice under this subsection (2), when serving the agent.
• (10) A payment made by an agent to the Commissioner in accordance with a notice issued under this section is treated as having been made on behalf of the taxpayer or the non-resident person who is subject to tax in Kenya and shall
• (11) The Commissioner shall credit any amount paid by an agent under this section against the tax owed by the taxpayer or the non-resident person who is subject to tax inKenya.

8. (12) The Commissioner may require,in writing,any person.within a period of at least thirty days,to provide areturn to theCommissioner showing anymonieswhichmaybeheld by thatperson for a taxpayeror thenon-resident person who is subject to tax inKenya referred to in subsection (l) or moniesheld by that person which are due to a taxpayer or the non-resident person who is subject to tax inKenya referred to in subsection(1).

• (13) An agent under subsection (2) or the non-resident person who is subject to tax in Kenya who without reasonable cause fails to comply with a notice or a requirement by the Commissioner under this section shall be personally liablefor the amount specified in the noticeorrequirement.
• (14) The Commissioner shall not issue a notice under this section unless-

11. (a) the taxpayer or the non-resident person who is subject to taxin Kenya has defaulted in paying an instalment under section 33(2): 12. (b) the Commissioner has raised an assessment and the taxpayer or the non-residentperson who issubjectto tax inKenya hasnot objected to or challenged the validity of the assessment within the prescribed period;

• (C) the taxpayer or thenon-residentperson who is subject to tax inKenya decisionwithin theprescribed timelines:
• (d) the taxpayer or the non-resident person who is subject to tax in Kenya hasmade a selfassessmentand submitted a return but has notpaid the taxes duebefore thedue date lapsed;or
• (e) the taxpayer has not appealed against an assessment specified in a decision of theTribunal orcourt.

Section42of Cap.469B,which it isproposed to amend-

Power to collect taxfromperson owingmoney to a taxpayer

• (1) This section applies when a taxpayer or a non-resident person who is subject to tax inKenya is.or will become liable to pay a tax and-

2. (a) the tax is unpaid tax:or 3. (b) the Commissioner hasreasonable grounds tobelieve that the taxpayer will notpay thetaxby the due datefor thepayment of the tax.

• (2) The Commissioner may.in respect of the taxpayer or the non-resident person who is subject to tax in Kenya and by notice in writing,require a person (referred to as the"an agent")-

5. (a)who owes or may subsequently owe money to the taxpayer or the nonresidentperson who is subject to tax inKenya: 6. (b) who holdsormay subsequently hold money,for or on account of.the taxpayer or thenonresident person who is subject to tax inKenya: 7. (c) who holds ormay subsequently holdmoney on accountofsome other person forpayment to the taxpayer or thenon-residentperson who is subject to tax inKenya;or 8. (d) who has authority from some other person to pay money to the taxpayer or thenon-residentperson who is subject to tax in Kenya,to pay the amount specified in the notice to the Commissioner.being an amount that shall not exceed the amountof the unpaid tax or the amountof taxthatthe Commissionerbelieveswillnotbepaid by the taxpayeror the nonresidentperson who is subject to tax in Kenya by the due date.

• (3) When a notice served under subsection(2) requires an agent to deduct a specified amount from a payment of a salary,wages or other similar remuneration payable at fixed intervals to the taxpayer or thenon-resident person who is subject to tax in Kenya,the amount required to be deducted by an agent from each payment shall not exceed twenty per cent of the amount of each payment of salary,wages.or other remuneration (after the payment of income tax).
• (4) This section shall apply to a joint account when-

• (a) all the holders of the joint account have unpaid taxliabilities:or
• (b) the taxpayer or the non-residentperson who is subject to taxinKenya can withdraw funds from the account (other than a partnership account) without the signature or authorisationof the other account holders.
• (5) An agent shall pay the amount specified in a notice under subsection (2)by the date specified in the notice.being a date that that doesnot occur before thedate that the amountowed by the agentto the taxpayer ornon-residentperson who is subject to tax in Kenya,becomes due to the taxpayer or non-resident person who is subject to tax in Kenya,or held on behalf of the taxpayer or nonresidentperson who issubjectto tax inKenya:
• (6)When an agentwho has been served with a notice under subsection (2) failsto comply with thenotice by reason of a lackofmonies held by an agent on behalf of,or due by an agent to the taxpayer or the non-resident person who is subject to tax in Kenya,an agent shall notify the Commissioner in writing within fourteen days of receiving the notice, setting out the reasons for an agent's inability to comply.
• (7)When the Commissioner is notified by an agent under subsection (6) that an agent is unable to pay the amount due,the Commissioner shall within a period of thirty days,in writing to the agent-
• (a) accept the notification and cancel or amend the notice issued under subsection(2);or
• (b) reject thenotification.
• (8) The Commissioner shall notify the agent in writing of a revocation or amendment of a notice given under subsection(2) where the taxpayeror the nonresidentperson who is subject to tax in Kenya pays thewhole or part of the tax due or has made an arrangement satisfactory to the Commissioner for the payment of the tax.
• (9)The Commissioner shall serve the taxpayer or the non-resident person who is subject to tax inKenya with a copy of a notice under this subsection (2), when serving the agent.
• (10) A payment made by an agent to the Commissioner in accordance with a notice issued under this section is treated as having been made on behalf of the taxpayer or the non-resident person who is subject to tax in Kenya and shall discharge the agent of anyliability to the taxpayer or any other person.
• (11) The Commissioner shall credit any amount paid by an agent under this section againstthe tax owedby the taxpayer or the non-residentperson who is subject to tax inKenya.
• (12) The Commissioner may require,in writing,any person,within a period ofat least thirty days,to provide a return to the Commissioner showing any monieswhich maybe held by that person for a taxpayer or the non-resident person who is subject to tax inKenya referred to in subsection (l) or monies held

by that person which are due to a taxpayer or the non-resident person who is subject to tax in Kenya referred to in subsection (1).

• (13) An agent under subsection (2) or the non-resident person who is subject to tax in Kenya who withoutreasonablecause fails to comply with a notice or a requirement by the Commissioner under this section shall be personally liableforthe amount specifiedin thenotice orrequirement.
• (14) The Commissioner shall not issue a notice under this section unless-
• (a) the taxpayer or thenon-residentpersonwhois subject to tax inKenya
• has defaulted in paying an instalment under section 33(2);
• (b) the Commissioner has raised an assessment and the taxpayer or the non-resident person who is subject to taxinKenya has not objected to or challenged the validity of the assessment within the prescribed period;
• (c) the taxpayer or the non-residentperson who is subject to tax in Kenya has not appealed against an assessment specified in an objection decision within the prescribed timelines:
• (d) the taxpayer or the non-residentpersonwho is subject to tax inKenya has made a selfassessmentand submitted a return buthas notpaid the
• taxesdue before the due date lapsed:or
• (e) the taxpayer has not appealed against an assessment specified in a
• decision of theTribunal orcourt.

Section44AofCap469B,which itisproposed toamend-

Certificate of Origin

• (1) This section applies to all goods imported intoKenya.

2. (2)Noperson shall import any goods into Kenya without presenting a valid 3. Certificate of Origin to the Commissioner or an authorised officer. 4. (3)The Commissioner or an authorized officer shall notprocess any import 5. entry documentationwithout avalid Certificate of Originbeingpresented. 6. (4)The Commissioner or an authorised officer shall require production ofa Certificate of Origin and other supporting documents as proof oforigin on goods imported intoKenyaprior to theirclearancefor entryintoKenya.

• (5) A Certificate of Origin shall be valid if it discloses the following

8. information- 9. (a) name and address of the exporter; 10. (b) 11. name and address of the importer; 12. (c) port of origin; 13. (d) accurate description of the goods: 14. (e) 15. quantity of the goods;

• () country of origin:and
• (g) country of destination.
• (6)Any person who contravenes the provisions of this section commits an offence and shall have theirgoods seized orforfeited to the Commissioner oran authorisedofficerinaccordancewithsection44of thisAct.

Section47ofCap.469B,which it isproposed toamend-

Offset orrefund ofoverpaid tax

• (1)Where a taxpayer has overpaid a tax under any tax law.the taxpayer may apply to the Commissionerin theprescribed form-
• (a) to offset the overpaid tax against the taxpayer's outstanding tax debts and future tax liabilities including instalment taxes and value added taxpayableon imports:or
• (b) for arefund of the overpaid tax-
• i in the case of income tax,within five years from the date on which thetaxwasoverpaid:or
• (ii) in the case of any other tax.within twelve monthsfrom the date on which the tax was overpaid.
• (2) The Commissioner shall ascertain and determine an application under subsection (l)withinone hundredand twenty daysandwhere the Commissioner ascertains that there was an overpayment of tax-
• (a) in the case of an application under subsection (l)(a),apply the overpaid taxto such outstanding tax debts orfuture taxliability;and
• (b) in the case of an application under subsection (1(b),refund the overpaid tax within a period of sixmonths from the dateof ascertainment and,if the Commissioner fails to refund.the overpaid taxshall be applied to offset the taxpayer's outstanding tax debtor futuretaxliabilities.
• (3)Where the Commissionerfails to ascertain and determine an application under subsection (i) within one hundred and twenty days, the same shall be deemed ascertained andapproved.
• (4)The Commissioner may.for purposes of ascertaining thevalidity of an application under subsection (1),subject the application to an audit.
• (4A) Where an application under subsection (l) has been subjected to an audit under subsection (4),the Commissioner shall ascertain and determine the applicationwithin one hundred and eighty days failure to which,the application shall be deemed tohavebeen ascertained and approved.
• (5)Where the application is for a refund of tax under subsection(1)(b),the Commissioner shall apply the overpayment in the following order-

• (a) inpayment of any other tax owing by the taxpayer under the specific
• taxlaw:
• (b) in payment of a tax owing by the taxpayer under any other tax law;
• and
• anyremainder shall berefunded to thetaxpayer.
• (c)
• (6)Where the Commissioner fails to refund theoverpaid tax within the period specified in subsection (2)(b),the amount due shall attract interest of one percent foreach month or part thereof duringwhich the amountremains unpaid.
• (7)Where the Commissioner notifies a taxpayer that an application under subsection (l)(a) has been ascertained and applies the overpaid tax liability to offset an outstanding tax in accordance with subsection (2)(a),interest or penalties shall not accrue on the amount applied to offsetting the outstanding tax liability from the dateof thenotification.
• (8) Where the Commissioner has applied the overpaid tax to offsetan outstanding tax liability under subsection (2)(a),any outstanding tax after such application shall accrue interest and penalties in accordance with thisAct.
• (9)Notwithstanding any other provision of this section,where a person overpays an instalment tax due under section 12of the Income Tax Act(Cap. 470),the Commissioner shall apply the overpaid tax to offset the taxpayer's
• future instalment taxliability.
• (10)Where,after the application of the overpaid tax under subsection (9), the Commissioner later determinesthat there wasno overpaymentof instalment tax.theamountofthetax thatwas used to offset thetaxpayer's futureinstalment tax liabilities under subsection (9) shall be treated as a tax due to the Commissioner in the subsequent taxperiod
• (11) Theamount due under subsection(l0) shall be due from the date that the Commissioner applied that amount to offsetaninstalment taxliability.
• (12) The Commissioner shall notify the taxpayer in writingofthe amount due under subsection(lo)and specify in the notification-
• (a) the interest on the amount due:and
• (b)any penalties due in respect of the amount due.
• (13) A person aggrieved by a decision of the Commissioner under this section may appeal to the Tribunal within thirty days after being notified of the decision.

Section75of Cap.469B,which itisproposed1oamend-

Application of electronic taxsystem

• (1) The Commissioner may,authorise the following to be carried out through the use of information technology,including computer systems,mobile electronic devices,electronic andmobile communication systems-

2. (a)an application for registration under a taxlaw;

• (b) thesubmitting or lodgingof a taxreturn orother document under a tax law:
• (c) thepayment orrepaymentof a taxunder a taxlaw;or
• (d) the doing of any other act or thing that isrequired to be done under a taxlaw.
• (2) A certificate of registration,service of a notice,issuing of any document,or other act or thing that is required to be issued,served,made,or done by the Commissioner under a taxlaw,may beissued,served,made,or done througha computer system,mobile electronic device or other form ofelectronic ormobilecommunication.

Section77of Cap.469B,which it isproposed toamend-

Due date for submission and payment

• (1) If thedate for-

2. (a) submitting or lodging a tax return,application,notice,or other document; 3. (b) the payment of a tax:or 4. (C) taking any other action under a tax law.

falls on a Saturday,Sunday.or public holiday in Kenya,the due date shall be thepreviousworking day:

Provided that where a person who submits a notice ofobjection in electronic form or a tax return in electronic form,or pays the tax electronically,the due date shall remain the date specified in the relevanttaxlaw.

• (2)In computing the period for the lodgement ofan objection to the Commissioner undersection51,an appeal to TaxAppealsTribunal undersection 52,an appeal to the High Court under section 53 or an appeal to the Court of Appeal under section 54,the computation shall not include Saturdays,Sundays orpublicholidays.

Section86of Cap.469B,whichit isproposed to amend-

Penalty forfailing to complywith electronic taxsystem

• (1) Where a tax lawrequires a taxpayer to issue an electronic taxinvoice, submit a taxreturn inelectronicform orpay a taxelectronically,and the taxpayer fails to comply with that tax law,the Commissioner shall issue a notice in writing to the taxpayerrequesting thereasonsfor thenon-compliance.
• (2) Where the reasons given under subsection (l) do not satisfy the Commissioner,the taxpayershall beliable to apenalty oftwo times the tax due.

Section89of Cap.469B,whichit isproposed toamend-

General provisionsrelating topenalty

• (1) Each penalty shall be calculated separately with respect to each section

2. in this Division.

• (2) If the same actor omission imposesmore than one penalty under a tax

4. law ona taxpayer,the Commissioner shall determine which penalty applies. 5. (3)A person shall be liable to a penalty only when the Commissioner 6. notifies in writing thatperson of a demand for thepenalty settingout the amount of the penalty payable and the due date for thepayment beinga date that isat least30 days after the date of thenotification.

• (4) Subsection (3) applies also to a penalty imposed under a tax law other

8. than this Act. 9. (5)A penalty payable by a person shall be due and payable on the date 10. specified in the notification under subsection(3). 11. (5A) The Cabinet Secretary may, on the recommendation of the Commissioner,waive the whole orpart of any penalty or interest imposed under thisActwhere the liability topay thepenalty or interestwas dueto- 12. (a) 13. (b) a delay in the updatingof an electronic tax system: 14. a duplication of a penalty orinterest due to a malfunction of an 15. (c) electronic taxsystem;or 16. (d) the incorrectregistration of the tax obligations of a taxpayer.

• (9) This Act shall not preclude the imposition of penalty under any other taxlaw and the same actor omission shall notbe subject to-

18. (a) the imposition of a penalty under more than one provision of that 19. (b) 20. other taxlaw:or 21. both the imposition of a penalty andprosecution for an offence under that other tax law.

Section112of Cap.469B,which it isproposed to amend-

Regulations

• (1)The Cabinet Secretary may make Regulations for the better carrying into effect of theprovisions of thisAct.
• (2)Without prejudice to the generality of subsection (l),the Regulations
• may-
• (a)
• prescribe conditions andprocedures forregistration:
• (b) provide for the submission ofreturns and the place atwhich returns are tobe submitted and tax to bepaid;
• (C)
• prescribe offence and penalties thereto;
• (d)provide rules and procedure for collection of unpaid tax by distrait;

• prescribe any other thingrequired tobeprescribed.
• (e)

Section2ofCap.469C,which it isproposed to amend-

Interpretation

• (1) In this Act,unless the context otherwise requires-

"East African Community Partner States"means the Republics of Burundi. Rwanda,Uganda andthe United Republic of Tanzania:

Section7of Cap.469C,whichit isproposed toamend

Import declaration fee

• (1) There shall be paid a fee to beknown as the import declaration fee,on allgoodsimportedinto thecountryforhomeuse.
• (2) The fee shall be at the rateof two point-five per centof the customs value of the goods and shall bepaid by the importerofsuch goods at the time of entering thegoods forhome use.

3. (3)Despite subsection(1)- 4. (a)import declaration fee shall not be charged on the goods specified in PartA of theSecond Schedule when imported or purchased before clearance through customs: 5. (4) An importer of goods other than goods specified in Part A of the SecondSchedule shall complete theprescribed import declaration form. 6. (5) An importer shall present a copy of the import declaration form completed under subsection(4) to the Commissioner at the time ofentering the goods for home use. 7. (6) Out of the fee collected under subsection (2),twenty per cent shall be paid into a Fund established and managed in accordancewith the Public Finance Management Act (Cap.412A) 8. (7) Ten percent of monies in the Fund under subsection (6) shall be used for the payment ofkenya's contributions to the African Union and any other international organisation to which Kenya has a financial obligation,while ten 9. percent shall be used forrevenue enforcement initiatives.

Section90f Cap.469C,which it isproposed to amend-

Application of East African Community Customs Management Act,2004

The provisions of the EastAfrican Community CustomsManagement Act, 2004,relating to the determination ofvalue ofimported goods,collection and enforcementofthepaymentofduty shall applyfor thepurposes ofassessment, collection and enforcement of the payment of import declaration fee,railway

development levy and exportlevy.

SecondScheduletoCap469C,whichitisproposedtoamend-

GOODSEXEMPTFROMIMPORTDECLARATION FEEANDRAILWAYDEVELOPMENTLEVY

PARTA

GOODSEXEMPTFROMIMPORTDECLARATIONFEEWHEN

IMPORTED

ORPURCHASEDBEFORECLEARANCE THROUGHCUSTOMS

(xv) All goodsand parts thereof of Chapter88:

PART B(S.8(6))

GOODSEXEMPTFROMTHERAILWAYDEVELOPMENTLEVY WHEN

IMPORTED ORPURCHASEDBEFORECLEARANCETHROUGH

CUSTOMS

(xii) all goods and parts thereof of Chapter 88:

Section96A of Cap.480,which it isproposed to amend-

trust

Exemption of stamp duty on the transfers relating to real estate investment

• (1) This section applies only to real estate investments trusts authorized under the Capital Markets Act(Cap.485A),inrespect of which it is shown to the collector-

2. (a) that the effect thereof is to convey or transfer a beneficial interest in property from one trustee to another trustee or to an additional trustee: or 3. (b) that the effect thereof is to convey or transfer a beneficial interest in 4. property from a person orpersons for the transferofunits in thereal estate investment trust.

• (2) No Stamp duty shall be chargeable on an instrument relating to the

6. matters referred to in subsection (1). 7. (3)An instrument to which this section applies shall be deemed to be duly stamped where it has,in accordance with the provisions of section 17,stamped with the particular stamp denoting that it is not chargeable with any duty. 8. (4) The exemption for instruments to which paragraph (l)(b)applies shall only have effect in respectof instruments executed before the 3lst December. 2022. 9. (5)For thepurposes of this section-

"additional trustee"means a new trustee appointed to an existing real estate investmenttrust.

"trustee" means a person appointed under a trust deed as a trustee of a real

estate investment trust or otherwise so appointed by the court or pursuant to regulations made under the Capital Markets.

Section3ofCap.427,which theBill proposes to amend-

3.Imposition of levy

• (1) The Cabinet Secretary shall.in consultation with the Cabinet Secretary for the time being responsible for finance,by Order published in the Gazette impose on any or all petroleum fuels entered for home use in Kenya a road maintenance levy(in this Act referred to as"the levy") which may be determined from time to time and in such manner as the Cabinet Secretary may specify in the Order.

2. (2)Out of the levy collected under subsection (1) there shall be paid an amount of three shillingsper litre ofpetroleum sold into theRoad AnnuityFund established under the Public Finance Management Act (Cap.412A)to fund the construction of roads under the Road Annuity Programme and similar roads approved by theNational Assembly.