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KRA gives accounting guidelines for Corporate Tax rates

By Sara Okuoro | January 28th 2021 at 14:15:00 GMT +0300

Times Tower building in Nairobi. [Standard, File]

The Kenya Revenue Authority (KRA) has released guidelines outlining the applicable Corporate Tax rates for the years of income 2020-2021.

The lower rate of 25 per cent was introduced in April 2020 as a tax relief to counter the negative effects of COVID 19 on business and employment incomes.

Resident corporates with accounting periods ending on or before March 30, 2020 have been advised to apply the 30 per cent rate.

“Taxpayers whose accounting period ends after January 1, 2021, shall determine the income for the accounting period and apportion the same between the two periods and charge the applicable rates,” said KRA Commissioner for Domestic Taxes, Rispah Simiyu, in a Statement.

“The process of enhancement of the iTax System is already underway to incorporate this interpretation,” she added.

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She advised taxpayers to prepare their accounts, submit returns through the current iTax system and pay the correct amount of tax in the intervening period.

“Any erroneous penalties or interest that may arise’ in the intervening period shall be corrected when the system is fully deployed,” said Simiyu.

KRA Commissioner for Domestic Taxes, Rispah Simiyu. 

The corporation tax rates shall apply as follows:

1. 30 per cent on income of a person whose accounting period ended on or before March 30, 2020.

2. 25 per cent on income of a person whose accounting period ended between April 1, 2020 and December 31, 2020.

3. For persons whose accounting period ends after 1st January, 2021, the Corporation Tax rate shall be applied as follows; 25 per cent for income earned in the period prior to January 1, 2021.  30 per cent for income earned in the period on or after January 1, 2021.

In December 2020, Corporation Tax recorded a performance rate of 93.5 per cent against the target. The performance was negatively affected by a decline in instalment remittance from banks by 25.3 per cent which reflects the impact of COVID on business performance.

 

Covid 19 Time Series

 


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