Kenya: Implementation of minimum tax

Kenya: Implementation of minimum tax

The minimum tax—introduced by the Finance Act, 2020 and effective 1 January 2021—seeks for each company registered and operating in Kenya to pay income tax regardless of whether it makes profit or not.

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The minimum tax is implemented parallel to the normal corporation income tax and is charged at a rate of 1% of a company’s gross business revenue. Read TaxNewsFlash

It is possible that implementation of the minimum tax:

  • Could jeopardise the viability of many businesses based on their operating models (due to the COVID-19 pandemic)
  • Could face controversies owing to some deficiencies in provisions of the Finance Act, 2020 and overlooked business factors
  • Could “water down” capital allowances and therefore deter investments in Kenya
  • Could conflict with section 15(4) of the income tax law for low-margin businesses

Read an April 2021 report prepared by the KPMG member firm in Kenya

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