![]() Deductible donations will be those made to: With effect from 3 April 2017, the Finance Act, 2017 provides that expenditure incurred by a taxpayer on donations for the alleviation of distress during national disaster as declared by the President will be deductible expenses for the taxpayer when determining taxable income. Charitable contributionsĭonations to qualifying charities and for certain public works are deductible, subject to certain conditions. holding companies that are regulated under the Capital Markets Act.īad debts are deductible in the year in which the debt has become irrecoverable in accordance with detailed rules under the ITA for making this determination.companies engaged in manufacturing whose cumulative investment is at least KES 5 billion, provided that the investment shall have been made outside Nairobi City County and Mombasa County and.companies engaged in manufacturing whose cumulative investment in the preceding five years from the commencement of this provision is at least KES 5 billion.companies undertaking the manufacture of human vaccines.microfinance institutions licensed and non-deposit taking microfinance businesses under the Microfinance Act, 2006 or entities licensed under the Hire Purchase Act or non-deposit taking institutions involved in lending and leasing business.micro and small enterprises registered under the Micro and Small Enterprises Act.financial institutions licensed under the Banking Act.The interest restriction provisions are not applicable to: The Act limits the deduction of interest expenses to a maximum of 30% of EBITDA (i.e earnings before interest, tax, depreciation, and amortisation) of the company or branch. Where a non-resident person controls a company alone or with four or fewer other persons, interest restriction rules apply ( see Interest deduction restriction in the Group taxation section). Companies involved in the affordable housing scheme are exempted, subject to Cabinet Secretary’s approval. Interest expensesĪ deduction for interest is allowed only to the extent that the borrowings are used for the purpose of trade. There is a specific provision allowing the deduction of certain start-up expenses, provided that the required conditions have been met. GoodwillĬost of acquisition of goodwill and amortisation of goodwill are not deductible as they are capital in nature. Transition provisions would provide guidance on the treatment of the tax written down balances that will be carried forward from previous years. No transition provisions have been included in the new Second Schedule. Purchase or an acquisition of an indefeasible right to use fibre optic cable by a telecommunication operator Motor vehicle and heavy earth moving equipmentĬomputer and peripheral computer hardware and software, calculators, copiers and duplicating machinesįilming equipment by a local film producer licensed by the Cabinet Secretary responsible for filming Machinery used to undertake exploration operations under a mining right Machinery used to undertake exploration operations under a prospecting right The capital/investment allowance rates are as follows: Capital/Investment allowanceĥ0% in first year of use and 25% per year in equal instalmentsĮducational buildings including student hostelsĥ0% in first year of use and 25% per year in equal instalments ![]() However, capital allowances are permitted at varying rates (on a straight-line basis) for certain assets used for business purposes, including buildings and machinery used in manufacturing, industrial buildings and hotels, machinery and plant, agricultural works, and mining. No deduction is allowed for accounting depreciation or impairment. The general principle in Kenya is that, unless expressly provided otherwise, expenses are tax deductible if they are incurred wholly and exclusively to generate taxable income. ![]()
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