Republic of Kenya
ATAF Member since 7 October 2009.
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Country Overview
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Capital City:
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Nairobi
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Chief of State:
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Mwai KIBAKI
President since 2002
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Head of Government:
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Mwai KIBAKI
President since 2002
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Area (sq km):
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582,000 (land & water)
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Population:
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38,610,097
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Revenue Overview
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Revenue Authority:
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Kenya Revenue Authority
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Administration Head:
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Mr. John K. Njiraini
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Institution Address:
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*
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P O Box 48240,
00100
Nairobi, Kenya
Times Tower, 26th Floor,
Haile Salassie Avenue
Nairobi, Kenya
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(
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Mobile:
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+254 20 342 195
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Phone:
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+254 20 340 837
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7
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Fax:
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+254 20 316 872
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e-Mail:
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john.njiraini@kra.go.ke
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Country Correspondent:
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Mrs. Betty WACHIRA
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Contact Details:
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Phone:
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+254 281 5168
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e-Mail:
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betty.wachira@kra.go.ke
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Country Correspondent:
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David Kiprop Sirikwa YEGO
Senior Assistant to Commissioner
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Contact Details:
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Mobile:
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+254 722 852 197
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Mobile:
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+254 733 666 140
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Phone:
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+254 281 7005 (Direct)
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Phone:
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+254 203 41 299
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e-Mail:
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david.yego@kra.go.ke
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e-Mail:
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alice.owuor@kra.go.ke
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Country Correspondent:
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Mr Joseph Gitau NDUATI
Commissioner Investigation
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Contact Details:
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(
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Mobile:
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+254 734 791 750
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Phone:
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+254 281 7045
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e-Mail:
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joseph.nduati@kra.go.ke
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Tax Rate Overview
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Personal Income Tax:
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Tax Year:
Calendar Year
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Tax Rate:
Progressive up to 30%
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Kenyan residents are taxable on their worldwide employment income, whereas a nonresident is taxable on Kenyan-source employment income. Only Kenyan citizens may offset tax on foreign employment income against the tax charged in Kenya on such income. Non-citizen residents must include their after-tax foreign-source employment income in their Kenya taxable income.
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Any balance of tax payable is due by 30 April in the following calendar year. Personal tax returns are due by 30 June following the end of the tax year. A personal tax return is required even where an individual's personal tax has been fully settled through the PAYE system.
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Corporate Tax:
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Tax Year:
Calendar Year although a company may adopt any year end. All taxable income is assessed in the fiscal year in which the company's accounting year ends.
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Tax Rate:
30% (with a branch of a foreign company taxed at 37.5%)
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Newly listed companies enjoy a reduced rate for 3-5 years following the year of listing, the rate (20%-27%) and period depending on the percentage of capital listed (must be more than 20%).
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Income tax is imposed on a company's gross income minus allowable deductions. In general, expenses must be incurred "wholly and exclusively" in the production of income and not be capital in nature to be deductible for tax purposes.
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Kenya provides for a 100% investment deduction on hotel buildings and on buildings and machinery used in manufacturing. Manufacturing investment in buildings and machinery situated within satellite towns adjoining Nairobi, Mombasa or Kisumu attract an investment allowance of 150%. Enterprises in export Processing Zones enjoy a 10-year tax holiday.
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Employers are required to submit quarterly Pay As You Earn (PAYE) returns before the 10th of the month following the end of each quarter, in respect of emoluments earned in each of the three months, including the tax deducted.
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Consumption Tax:
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Nature of the Tax:
Value Added Tax (VAT)
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Tax Rate:
16%
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Filing & Payment:
VAT returns and any related payments are due by the 20th day of the following month.
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Zero-rated supplies include the export of goods and taxable services and the supply or import of specified goods, particularly where used in agriculture, health and education, computer hardware and software, international air travel and supplies to licensed oil exploration companies. Exempt supplies include financial services provided by banks and most agricultural produce in its unprocessed or preserved state.
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Economic Overview
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GDP per capita (PPP) %:
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US$ 30,143 million (2009)
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Tax to GDP Ratio %:
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23.7%
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Inflation Rate %:
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3.96% (annual average for December 2010)
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Currency:
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Kenyan Shilling
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Introduction:
- The Kenyan Gross Domestic Product (GDP) was estimated by the International Monetary Fund (IMF, World Economic Outlook, October 2010) to total US$ 30,143 million in 2009. With a population of 38.6 million, this gave Kenya a per capita income of US $781, 22% below the threshold for middle income country status, (US$ 996 for 2009 as per World Bank criteria). Kenya is the largest economy in the East African Community (EAC).
Recent Economic Performance:
- After stagnating through most of the 1990s as the country battled with the effects of poor macro economic management in the early nineties and under took significant economic reforms, the economy has been on a growth path for most of the 1st decade of the 21st Century.
- Economic growth over the past 5 years (2005 to 2009 inclusive) has averaged 4.7 percent while the 2010 quarterly data shows a 1st quarter growth of 4.7%, 2nd quarter 5.3% and 3rd quarter 6.1%. 2010 therefore appears to be a recovery year following growth of 1.7% in 2008 and 2.6% in 2009, brought about by political disturbances and the global financial crisis respectively.
- Other macro economic indicators have shown similar positive results. Inflation has declined from an average of 18.5% in 2007/08 to below 5% in 2010. Strong revenue growth and prudent expenditure policy ahs allowed the Government to restrain the budget deficit and thus achieve a sustainable debt position, with overall debt to GDP ratio of 42% while external debt was 20.5% of GDP.
- The current account deficit (including official transfers) 6.3% of GDP in 2009/10 while foreign exchange reserves provided over 3 months of import cover. The Kenyan economy is therefore experiencing growth with stability.
Revenue Performance:
- Kenya has traditionally had among the strongest revenue performance in the region. Tax to GDP ratio was estimated at 23.7% in 2009/10. Kenya Revenue Authority (KRA) has been at the heart of this revenue performance accounting for over 95% of Government Ordinary Revenues. KRA revenue performance has been one of strong growth averaging over 11% over 1995/96-2009/10.
- Kenya’s tax composition shows a shift away from trade related taxes (with import duties declining from 17.5% in 1995/96 to 8% in 2008/09) and an increasing reliance on indirect taxes, especially Value Added Tax (VAT) which rose from 23.5% to 28.2% over the same period.
- Over the 2010/11 Fiscal Year KRA will be expected to do even better than it has done in the past with revenues targeted to grow by over 20%.
Relations with Development Partners:
The IMF
- After an era of stop and go relations with the Fund, the Kenyan Government has been able to pursue a consistent relationship with the Fund. This has culminated in the country reaching an agreement with the Fund in principle for a US$ 500 million Extended Fund Facility through December 2013.
- Over the recent past IMF Executive Directors reports have commended the Kenyan authorities for implementing sound macro economic policies which is a change from past practice when ‘weak and patchy’ commitment was a common phrase in these reports.
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