Tax Policy In Kenya

1379 Words6 Pages
2.3 Empirical Review
2.3.1 Tax Policy
Imaga (2003) states that tax policy is the choice by a government as to what taxes to levy, in what amounts, and on whom. It has both microeconomic and macroeconomic aspects. The macroeconomic aspects concern the overall quantity of taxes to collect, which can inversely affect the level of economic activity; this is one component of fiscal policy. The microeconomic aspects concern issues of fairness and allocative efficiency. Policymakers debate the nature of the tax structure they plan to implement and how they might affect individuals and businesses. The reason for such focus is economic efficiency as advisor to the Stuart King of England Richard Petty had noted that the government does not want to kill
…show more content…
All companies which intend to list on the Nairobi Stock Exchange (NSE) must make an application to the CMA and the NSE. There are set terms and conditions for listing that company must comply with to be granted the necessary approvals. Tax laws apply to all corporate entities, both local and foreign, conducting business in the country, whether they are incorporated or operating through permanent establishments (Iwara, 2007). All corporate entities are required to register for a personal identification number (PIN) with the Kenya Revenue Authority (KRA). They are also required to register for applicable tax obligations which include income tax, pay as you earn (PAYE, or personal taxes), VAT and excise duty (Weber,…show more content…
This is the tax levied on the income of legal entities. Kenyan taxes are levied on corporations’ income derived or accrued in the country. Companies that operate branches outside the country are required to report all incomes earned by those branches in the country (Umoh, 2008). Corporation tax is imposed on the taxable income which is the accounting profit/loss adjusted for certain allowable and disallowable expenses. The deductibility of expenses is premised on the fact that they were wholly and exclusively incurred in the generation of taxable income. The corporation tax rate for resident companies in the country is 30%. In Kenya, residency for a legal entity may arise through the incorporation, management and control of an entity and the declaration by the Cabinet secretary in-charge of the Treasury that the person is a resident (Owoh,

More about Tax Policy In Kenya

Open Document