Kenya announces new draft income tax – turnover regulations 2023 for consideration

published on 7 December 2023

The Kenya Revenue Authority (the KRA) has announced new draft income tax turnover tax regulations. Through a public notice dated 23 November 2023, the commissioner general of the KRA has invited the public, professionals, and stakeholders to submit their input for consideration to be included in the final regulations. This is in compliance with public participation requirements in Kenya.

Key proposals in the turnover tax regulations 2023

Some of the notable proposals in the draft regulations include:

The increase of the turnover tax threshold to one million shillings for the lower threshold and twenty-five million shillings for the upper threshold per each year of income;
Exemption of rental income, management or professional or training fees income that is subject to a final withholding tax and any persons exempt from tax under the first schedule from the provisions of turnover tax;
Inclusion of specific timelines within which communication to the commissioner of income tax on exemptions from turnover tax. Any person who requires to be exempted has the obligation to communicate at least three months before the end of that year of income and the Commissioner is expected to respond within sixty days from receipt of such notice;
Amendment of the word “tax period” to mean “every calendar month” instead of “every three calendar months” commencing 1 January every year.

Other amendments include:

Deletion of specific penalties relating to non-adherence to the current turnover tax rules. Reliance will now be placed on the general penalties stipulated in the Tax Procedures Act;
The definition of the word “person” will now exclude partnerships.

Should the draft income tax (turnover tax) regulations 2023 be passed, they will revoke the income tax (turnover tax) rules 2007 that are currently in force.