Implementation of ‘Minimum Tax’ to commence in January 2021 amid a gloom economy
Implementation of ‘Minimum Tax’ to commence in Jan 2021
The ‘Minimum Tax’ introduced by the Finance Act, 2020 (the Act) will take effect on 1 January 2021. The tax seeks to ensure that each company registered and operating in Kenya pays income tax regardless of whether it makes profit or not. Minimum tax will be implemented parallel to the normal corporation income tax and will be charged at 1% of a company’s gross business revenue.
Corporation income tax for a locally incorporated company is currently levied at 25% of the company’s taxable profit. This though is likely to go back to 30% in January 2021. This tax is payable in installments on the 20th day of the fourth, sixth, ninth and twelfth month of a company’s accounting year. These quarterly tax payments are referred to as installment taxes.
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