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Jul 10, 2017

Living there


INDIVIDUAL TAXATION

Kenya beachfront houses

Residents of Kenya are liable to tax on their worldwide income. Worldwide income is limited only to income earned from employment or rendering services abroad and on income from a business carried partly within and partly outside Kenya. Married couples are generally taxed jointly, but they may elect for separate taxation.

INCOME TAX

Income in Kenya is categorized according to the following: (1) business income, (2) employment income, (3) professional income, (4) income from property, (5) dividends and interest income, (5) income from agricultural activities, and (7) royalties, pensions or annuities. Taxable income is computed according to its categorization; gross income less any allowable deductions.

Income is generally taxed at progressive rates, from 10% to 30%.

INCOME TAX 2018

TAXABLE INCOME, KES (US$) TAX RATE
Up to 147,580 (US$1,461) 10%
147,580 286,623 (US$2,838) 15% on band over US$1,461
286,623 425,666 (US$4,215) 20% on band over US$2,838
425,666 564,710 (US$5,591) 25% on band over US$4,215
Over 564,710 (US$5,591) 30% on all income over US$5,591
Source: Global Property Guide

INCOME TAX 2017

TAXABLE INCOME, KES (US$) TAX RATE
Up to 134,164 (US$1,328) 10%
134,164 260,567 (US$2,580) 15% on band over US$1,328
260,567 386,970 (US$3,831) 20% on band over US$2,580
386,970 513,373 (US$5,083) 25% on band over US$3,831
Over 513,373 (US$5,083) 30% on all income over US$5,083
Source: Global Property Guide

Some deductions are granted to resident taxpayers.

  • Personal relief currently fixed at KES15,390 (US$152) per person per annum.
  • Insurance relief in respect of premiums paid on a life insurance policy or education and health policy subject to certain conditions. The amount of relief is 15% of the premiums paid subject to a maximum of KES60,000 (US$594) per annum.
  • Pension contributions and social security contributions, subject to certain limits.
  • Mortgage interest paid on owner-occupied houses up to a maximum of KES150,000 (US$1,485) per annum.

RENTAL INCOME
Rental income earned by residents is taxed at the standard progressive income tax rates. Income-generating expenses are deductible for income tax calculation purposes.

Rental income earned by resident individuals is subject to 3% withholding tax. This withholding tax is deductible against income tax liability.

Stamp Duty on Property Leases

Stamp duty is levied on property leases at varying rates, depending on the lease duration. Stamp duty is levied at a flat rate of 1% on period leases up to 3 years, and at a flat rate of 2% on period leases exceeding 3 years.

STAMP DUTY ON PROPERTY LEASES

LEASE PERIOD RATE
Up to 3 years 1%
Over 3 years 2%

CAPITAL GAINS
No tax is levied on capital gains realized from the sale of real property in Kenya.

Stamp Duty on Property Transfers

Stamp duty is levied on property transfers at varying rates, depending on the location of the property. Stamp duty is levied at a flat rate of 4% on properties located in municipalities, and at a flat rate of 2% on properties located outside municipalities.

STAMP DUTY ON PROPERTY LEASES

PROPERTY LOCATION RATE
in a municipality 4%
Outside a municipality 2%

PROPERTY TAX


Property Tax

This is an annual tax levied by the local government depending on the location and value of the property. It is usually about 1% of the property value.

Land Tax

Land tax is a local tax with rates varying depending on the location of the land. The highest rate is 8% which applies in Nairobi.

CORPORATE TAXATION

INCOME TAX

Income of nonresident companies is subject to income tax at a flat rate of 37.50%. Income-generating expenses are deductible when calculating taxable income.






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