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Personal Taxes in Kenya

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Personal Taxes in Kenya
Computation of PAYE
Monthly pay for PAYE computation
Employees Benefits chargeable to tax
Outsourced Services
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Personal taxes' in Kenya is mainly regulated under the income tax act 1974 laws of Kenya. Under the Pay as you earn (PAYE) regime employers are required to deduct and remit taxes to Kenya Revenue Authority by 9th of every month. But most employers do not consider people engaged by them as employees due to the time served or nature and timing of payment.

It should be noted that the method used for payment of salaries and wages for example through bank transfer, cheque, cash payment, payment in kind is not relevant in computation and payment of (Personal Taxes) Pay as You Earn as is normally named in Kenya. PAYE applies even when the employer has no money to pay the employees.

Who is an employee under Kenyan Tax Laws. An employee is defined as inclusive of any holder of an appointment of office, whether public, private or calling, for which remuneration is payable. "Employee" should be read as including, for example a company director (resident or non-resident), secretary, individuals working for any Religious Organization etc., in addition to those more commonly known as employees.

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Pay as you earn is computed using graduated scale rates the minimum being 10% and the highest 30% of the taxable pay. Before subjecting the employee earnings to the tax brackets, you need to do some adjustments because not all benefits are taxable. Some of these adjustments to name but a few are;

  1. Contribution to a registered pension scheme or provident fund
  2. Owner occupied interest
  3. Home ownership savings plan

After computation of taxes payable, the Government grants relief to individuals such as;

  • Insurance relief
  • Personal relief

 

Monthly Pay "Monthly pay" includes income in respect of any employment or service rendered, accrued in or derived from Kenya. This will include:

(i) Wages, salary, leave pay, sick pay, payment in lieu of leave, directors' fees and other fees,overtime, commission, bonus, gratuity or pension whether payable monthly or at longer or shorter intervals.

(ii) Cash allowances, e.g. house or rent allowance, telephone allowance, round sum allowance etc.

(iii) The amount of any private expenditure of the employee paid by the employer otherwise than as a loan, e.g. house rent, grocery bills, electricity, water, telephone bills, school fees.

(iv) Non-cash benefits when the aggregate value exceeds Kshs.3000 per month.

The value of housing, where provided by the employer. This means that all allowances and benefit to employees are taxable except those expressly exempted under the act.

 


 

The following benefits are chargeable to tax on the employees among others;

  • Motor vehicle provided bt the employer whether owned or leased
  • House provided by the employer whether owned or leased
  • Loan provided by the employees free of interest or interest lower than market interest rate
  • Education fees for the children if not taxed on the employer

 


 

Our professionals will help you individuals in the following services outsourced to us;

  • Preparation of personal budgets
  • Advise on the lowest cost of financing available
  • Tax incentives available for individuals
  • Preparation of payroll for your domestic workers
  • Registration of employees with NHIF, NITA and NSSF
  • Application of personal loans with local banks
  • Training on managing your small business
  • Other specialized personal services
  • Payment of utility bills, Water, Electricity, Telephone



get in touch with us: + 254 735 679 308 | 020 2400 366 | This e-mail address is being protected from spambots. You need JavaScript enabled to view it | www.laxiaafrica.com