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Kenya’s VAT system imposes reverse VAT on imported services, requiring the recipient—not the foreign supplier—to account for and remit VAT. Under Section 10 of the VAT Act, imported services are taxed if supplied by a non-resident and would be taxable if provided locally. The standard rate of 16% applies, and payment is made via iTax using a PRN. Recent updates clarify that both registered and unregistered persons must comply, with VAT due at the earliest of invoice, payment, or service delivery.

Kenya’s Finance Act, 2025 introduces subsection 10(1)(m) to the Income Tax Act, expanding taxable income to include payments made through digital marketplaces. Starting July 1, 2025, non-resident service providers earning from Kenyan users will be taxed, aligning with the withholding tax provisions from the 2024 Tax Laws Amendment Act.

Starting October 1st, 2025, Kenya enforces a new import regulation under the Finance Act 2025 requiring all inbound cargo to be accompanied by a valid Certificate of Origin (COO). This document—issued by a competent authority in the country of export—must be presented at customs as a prerequisite for cargo clearance. Failure to comply will lead to seizure or forfeiture of goods by the Kenya Revenue Authority.

Starting 1 July 2025, Kenya exempts stamp duty on internal company restructures involving proportional property or share transfers to shareholders. This amendment to Section 117 of the Stamp Duty Act reduces tax burdens on non-commercial reorganizations, enabling more flexible and cost-effective corporate structuring.

Explore the impact of Kenya's Finance Act 2025 on pension taxation, including the removal of previous exemptions and new qualifying conditions for tax-free withdrawals. Learn how pension payments, annuities, gratuities, and allowances are treated under the revised Income Tax Act and retirement benefits regulations, effective 1st July 2025.

Kenya’s Finance Bill 2025 introduces a major update to the mortgage interest deduction, now allowing taxpayers to claim up to KES 360,000 annually on interest from construction loans—not just for purchasing or renovating homes. The deduction applies if the mortgage is from one of six designated financial institutions and targets owner-occupied residential properties. This shift aims to boost home ownership and real estate investment, especially for middle-income earners. However, limitations on the loan source and deduction cap may hinder broader impact.

The Kenya Finance Bill, 2025 proposes a key amendment to the Income Tax Act, allowing automatic approval of accounting year-end changes if the KRA fails to respond within six months. This move aims to boost efficiency, reduce administrative delays, and improve business certainty in financial reporting.

Treasury CS John Mbadi unveiled Kenya’s largest-ever budget at Ksh 4.2 trillion, focusing on fiscal discipline amid rising debt and economic strain. The budget avoids new taxes following the rejection of the Finance Bill 2024, instead emphasizing improved tax administration and lean spending. Key proposals include full tax exemption on gratuity payments, mortgage interest relief for self-built homes, and accelerated tax relief for businesses. Education, infrastructure, and security sectors received significant allocations, while healthcare saw both boosts and cuts across programs. Critics, including Gideon Moi, raised concerns over heavy borrowing and disproportionate recurrent spending

Explore a comprehensive breakdown of Kenya's Finance Bill, 2025—covering tax amendments, fiscal policies, and their impact on businesses and individuals. Gain insights into economic shifts and budgetary implications affecting various sectors.

On 21st March 2025, the Court of Appeal ruled that VAT is chargeable on the sale of commercial property, reversing a High Court decision. The case involved KRA, which was ordered to refund VAT previously paid, amidst claims of ambiguity in the VAT Act, 2013 regarding property classification.

On 13th February 2025, the Kenya Revenue Authority (KRA) issued a public notice on the implementation of the Charitable Organizations & Donations & Exemption Rules, 2024. The regulations, effective from 18th June 2024, introduce significant changes to the income tax exemption process, requiring compliance for all new applications and previously exempted organizations by 18th June 2025. The notice emphasizes transitional provisions and the need for taxpayers to adhere to these updated requirements.

Kenya-Singapore Double Taxation Agreement (DTA):double addresses On September 23rd, 2024, Kenya and Singapore signed a new Agreement for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance. This new DTA replaces the earlier agreement signed on June 12th, 2018. On February 11th, 2025, the Kenyan Cabinet approved the agreement, allowing for the formal ratification process to begin. The DTA clarifies the taxing rights of both countries on income flows arising from cross-border business activities, addresses double taxation, and aims to boost trade and economic flows between Kenya and Singapore.

The Tax Procedures Amendment Act, 2024, signed into law by President William Ruto on December 11, 2024, introduces several key changes to the Tax Procedures Act of 2015. Notably, it extends the Tax Amnesty Program, with the base period starting from December 31, 2023, and concluding on June 30, 2025. Additionally, the Act clarifies the reverse invoicing threshold and provides detailed guidelines on the contents of an electronic tax invoice.

The National Treasury has introduced the Tax Laws (Amendment) Bill, 2024 and the Tax Procedures (Amendment) (No.2) Bill, 2024, which propose changes to several tax acts. These bills had their First Reading on 13th November 2024. The public is invited to participate and provide comments on 22nd and 23rd November 2024. Our alert compares these amendments with the withdrawn Finance Bill, 2024.

The government is shifting from the traditional comprehensive Tax Laws (Amendment) Bill to a more incremental approach for amending current tax laws. On August 19, 2024, the Cabinet Secretary for the National Treasury and Economic Planning submitted the Tax Procedures (Amendment) Bill, 2024 to the National Assembly. This Bill aims to amend the Tax Procedures Act (Chapter 468B of the Laws of Kenya).

Stay updated with the latest Income Tax regulations for charitable organizations in Kenya. The new Income Tax (Donations and Charitable Organizations Exemptions) Regulations, 2024, provide comprehensive guidelines for applying for tax exemptions from the Kenya Revenue Authority (KRA). Learn about the criteria for recognition, application procedures, and the transition period for compliance by June 18, 2025. Ensure your organization meets the new requirements and benefits from tax exemptions.