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Kenya Tax Burden
Chaka
#21 Posted : Friday, March 06, 2015 5:56:20 PM
Rank: Elder


Joined: 2/16/2007
Posts: 2,114
Is there such a thing as a LLC having only one director?Is a sole proprietor Co. also entitled to those WTA deductions?
murchr
#22 Posted : Friday, March 06, 2015 7:13:44 PM
Rank: Elder


Joined: 2/26/2012
Posts: 15,973
Swenani wrote:
PeterReborn wrote:
kenmac wrote:
Swenani wrote:
ChumviMacho wrote:
Hello Wazuans,


I am desperate to reduce my taxes and wonder if anyone has tips on reducing their income tax. I have taken out an education policy and a HOSP (Home Ownership Savings Plan)but the saving is marginal. I know taxes are certain in life but wonder if you guys have other ideas on trimming your payables to KRA?

I am employed and run a small biz on the side. Inflation is biting hard and I am beginning to feel the heat in my pocket.

Again, there was talk last year about widening the tax bands, is that something we can lobby for? methinks taxing anyone earning less than 20K is immoral and for people earning less than 50K to be at the top rate is just not fair?

Any thoughts, ideas?


Register a company,then ask your current employer to employ you as a company and not as an individual.smile



Brilliant answer.

Will you not pay the corporate tax @30% which will be higher than the graduated scale rates?


When your register a company,you can be able to deduct the following expenses creatively before taxation
1.Fuel /transport costs
2.WTA on your house(Register your house in the company's name and call it office premises)
3.Meals for your and your family(your can call it employee meals or employee welfare)
4.House keeping expenses(Office maintenance)
5.Savings
6.House helps salary(You can call it wages to casuals
etc.
7.Buy a company car and charge WTA.
8.Charge WTA on your company(of course its yours) electronics(TV;s phones, computers etc), furniture etc

Deduct everything and declare a loss to KRA


Yes, if you are working online. Not practical otherwise
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
whiteowl
#23 Posted : Saturday, March 07, 2015 2:42:46 PM
Rank: Veteran


Joined: 4/16/2014
Posts: 1,420
Location: Bohemian Grove
murchr wrote:
Swenani wrote:
PeterReborn wrote:
kenmac wrote:
Swenani wrote:
ChumviMacho wrote:
Hello Wazuans,


I am desperate to reduce my taxes and wonder if anyone has tips on reducing their income tax. I have taken out an education policy and a HOSP (Home Ownership Savings Plan)but the saving is marginal. I know taxes are certain in life but wonder if you guys have other ideas on trimming your payables to KRA?

I am employed and run a small biz on the side. Inflation is biting hard and I am beginning to feel the heat in my pocket.

Again, there was talk last year about widening the tax bands, is that something we can lobby for? methinks taxing anyone earning less than 20K is immoral and for people earning less than 50K to be at the top rate is just not fair?

Any thoughts, ideas?


Register a company,then ask your current employer to employ you as a company and not as an individual.smile



Brilliant answer.

Will you not pay the corporate tax @30% which will be higher than the graduated scale rates?


When your register a company,you can be able to deduct the following expenses creatively before taxation
1.Fuel /transport costs
2.WTA on your house(Register your house in the company's name and call it office premises)
3.Meals for your and your family(your can call it employee meals or employee welfare)
4.House keeping expenses(Office maintenance)
5.Savings
6.House helps salary(You can call it wages to casuals
etc.
7.Buy a company car and charge WTA.
8.Charge WTA on your company(of course its yours) electronics(TV;s phones, computers etc), furniture etc

Deduct everything and declare a loss to KRA


Yes, if you are working online. Not practical otherwise

You can declare some small profit so as not to spook KRA guys
Lolest!
#24 Posted : Sunday, March 08, 2015 6:28:05 AM
Rank: Elder


Joined: 3/18/2011
Posts: 12,066
Location: Kianjokoma
whiteowl wrote:
murchr wrote:
Swenani wrote:
PeterReborn wrote:
kenmac wrote:
Swenani wrote:
ChumviMacho wrote:


Register a company,then ask your current employer to employ you as a company and not as an individual.smile



Brilliant answer.

Will you not pay the corporate tax @30% which will be higher than the graduated scale rates?


When your register a company,you can be able to deduct the following expenses creatively before taxation
1.Fuel /transport costs
2.WTA on your house(Register your house in the company's name and call it office premises)
3.Meals for your and your family(your can call it employee meals or employee welfare)
4.House keeping expenses(Office maintenance)
5.Savings
6.House helps salary(You can call it wages to casuals
etc.
7.Buy a company car and charge WTA.
8.Charge WTA on your company(of course its yours) electronics(TV;s phones, computers etc), furniture etc

Deduct everything and declare a loss to KRA


Yes, if you are working online. Not practical otherwise

You can declare some small profit so as not to spook KRA guys

I know some one man show that runs with some of Swenani's ideas

The owner's car is a company car. The wife and mum's car are also serviced by the company

Claims meals from the company

Supermarket shopping

Drawings are incorporated into expense lines
Laughing out loudly smile Applause d'oh! Sad Drool Liar Shame on you Pray
Lolest!
#25 Posted : Sunday, March 08, 2015 6:34:03 AM
Rank: Elder


Joined: 3/18/2011
Posts: 12,066
Location: Kianjokoma
If you register your car as a company car, you will be taxed for car benefit depending on cost/cc of the car on your personal pay(salary)

You may opt to deduct your house rent from company expenses. This would however mean you(individual, not company) get taxed for house benefit! Adjust for that as well

But buying assets and registering them under the company is definitely a good idea. Claiming wear and tear as well as running/repair costs is an advantage

Laughing out loudly smile Applause d'oh! Sad Drool Liar Shame on you Pray
Amani254
#26 Posted : Sunday, March 08, 2015 6:35:47 AM
Rank: New-farer


Joined: 3/6/2014
Posts: 21
There was a time they had talked widening the tax bands so that minimum taxable income goes up to say 20K. That kind of ended? Is there a way to lobby the minister in charge ahead of the next budget?
Lolest!
#27 Posted : Sunday, March 08, 2015 6:59:08 AM
Rank: Elder


Joined: 3/18/2011
Posts: 12,066
Location: Kianjokoma
2012 wrote:
Increase your pension contribution to the maximum allowed by law (I think it's 20k) you'll get some good tax relief.

Yeah 20k is deductible for tax purposes per month

The insurance thing doesn't help much. While if you are deducting pension the entire amount upto 20k is deductible before computing tax, for insurance the relief is only 15% of the premium you pay and is capped at 5000 bob.

For example you earn 50k, you listen to those 'financial advisors' from Britam/Jubilee/ICEA...

You buy those funny insurance plans where you pay 10k premium monthly
Taxable pay=50,000-(15%*10,000)-200(nssf)-1162(personal relief)

On the other hand, if you take a pension for 10k

Taxable pay=50,000-10,000(pension)-200(nssf)-1162(personal relief)

So avoid those insurance plans if the purpose is to make tax savings. They give you very little and you can lose all your money if you fail to contribute. The reason they always want to sell them to you is that's where they make money. There's almost no money in pension for insurance companies!
Laughing out loudly smile Applause d'oh! Sad Drool Liar Shame on you Pray
Swenani
#28 Posted : Sunday, March 08, 2015 10:06:10 AM
Rank: User


Joined: 8/15/2013
Posts: 13,220
Location: Vacuum
Amani254 wrote:
There was a time they had talked widening the tax bands so that minimum taxable income goes up to say 20K. That kind of ended? Is there a way to lobby the minister in charge ahead of the next budget?


Last year,Iheard Rotich say they will introduce it in this year's budget,though the threshold was 50K if I'm not wrong
If Obiero did it, Who Am I?
Amani254
#29 Posted : Tuesday, March 10, 2015 6:14:00 AM
Rank: New-farer


Joined: 3/6/2014
Posts: 21
It will be interesting to see this happen. Sometimes they put a notice in the papers calling for proposals/submissions ahead of the budget. Has anyone seen this? Any contacts/email address to send submissions? I really want to lobby for this.
nakujua
#30 Posted : Thursday, April 23, 2015 6:45:56 PM
Rank: Elder


Joined: 12/17/2009
Posts: 3,583
Location: Kenya
PeterReborn wrote:
Swenani wrote:
PeterReborn wrote:
kenmac wrote:
Swenani wrote:
ChumviMacho wrote:
Hello Wazuans,


I am desperate to reduce my taxes and wonder if anyone has tips on reducing their income tax. I have taken out an education policy and a HOSP (Home Ownership Savings Plan)but the saving is marginal. I know taxes are certain in life but wonder if you guys have other ideas on trimming your payables to KRA?

I am employed and run a small biz on the side. Inflation is biting hard and I am beginning to feel the heat in my pocket.

Again, there was talk last year about widening the tax bands, is that something we can lobby for? methinks taxing anyone earning less than 20K is immoral and for people earning less than 50K to be at the top rate is just not fair?

Any thoughts, ideas?


Register a company,then ask your current employer to employ you as a company and not as an individual.smile



Brilliant answer.

Will you not pay the corporate tax @30% which will be higher than the graduated scale rates?


When your register a company,you can be able to deduct the following expenses creatively before taxation
1.Fuel /transport costs
2.WTA on your house(Register your house in the company's name and call it office premises)
3.Meals for your and your family(your can call it employee meals or employee welfare)
4.House keeping expenses(Office maintenance)
5.Savings
6.House helps salary(You can call it wages to casuals
etc.
7.Buy a company car and charge WTA.
8.Charge WTA on your company(of course its yours) electronics(TV;s phones, computers etc), furniture etc

Deduct everything and declare a loss to KRA

Laughing out loudly Laughing out loudly Laughing out loudly You are a genius.

wewe @Swenani, naona wewe ni genius - saidia hapa.

my neighbor came across some guys willing to hire them as a consultant na waka kubaliana the coins they will pay after my neighbor delivers on some tasks;

my neighbor asked me these questions nikamwambia sina time, will answer him latter.

1. They say they will take care of withholding tax - sijui how that works. saidia hapo

2. can one invoice under their name, ama one must register a ka business name for that, if not does one weka pin number hapo kwa invoice.

3. how does consultancy income reflect on ones tax obligation, and must your pin be online.

4. if one has been out of employment for a very long time, will that ka gap in the tax records have issues.

niambie jirani nini? anyone who knows hii mambo saidia naomba smile
PeterReborn
#31 Posted : Friday, April 24, 2015 12:32:13 PM
Rank: Veteran


Joined: 1/3/2014
Posts: 1,061
nakujua wrote:
PeterReborn wrote:
Swenani wrote:
PeterReborn wrote:
kenmac wrote:
Swenani wrote:
ChumviMacho wrote:
Hello Wazuans,


I am desperate to reduce my taxes and wonder if anyone has tips on reducing their income tax. I have taken out an education policy and a HOSP (Home Ownership Savings Plan)but the saving is marginal. I know taxes are certain in life but wonder if you guys have other ideas on trimming your payables to KRA?

I am employed and run a small biz on the side. Inflation is biting hard and I am beginning to feel the heat in my pocket.

Again, there was talk last year about widening the tax bands, is that something we can lobby for? methinks taxing anyone earning less than 20K is immoral and for people earning less than 50K to be at the top rate is just not fair?

Any thoughts, ideas?


Register a company,then ask your current employer to employ you as a company and not as an individual.smile



Brilliant answer.

Will you not pay the corporate tax @30% which will be higher than the graduated scale rates?


When your register a company,you can be able to deduct the following expenses creatively before taxation
1.Fuel /transport costs
2.WTA on your house(Register your house in the company's name and call it office premises)
3.Meals for your and your family(your can call it employee meals or employee welfare)
4.House keeping expenses(Office maintenance)
5.Savings
6.House helps salary(You can call it wages to casuals
etc.
7.Buy a company car and charge WTA.
8.Charge WTA on your company(of course its yours) electronics(TV;s phones, computers etc), furniture etc

Deduct everything and declare a loss to KRA

Laughing out loudly Laughing out loudly Laughing out loudly You are a genius.

wewe @Swenani, naona wewe ni genius - saidia hapa.

my neighbor came across some guys willing to hire them as a consultant na waka kubaliana the coins they will pay after my neighbor delivers on some tasks;

my neighbor asked me these questions nikamwambia sina time, will answer him latter.

1. They say they will take care of withholding tax - sijui how that works. saidia hapo

2. can one invoice under their name, ama one must register a ka business name for that, if not does one weka pin number hapo kwa invoice.

3. how does consultancy income reflect on ones tax obligation, and must your pin be online.

4. if one has been out of employment for a very long time, will that ka gap in the tax records have issues.

niambie jirani nini? anyone who knows hii mambo saidia naomba smile


Withholding tax is tax deducted at the source.If you are a consultant,you wont get the full invoice amount.some amout will be deducted by the customer and remitted to KRA.He needs to get a WHT certificate from the customer to confirm that the amount deducted was for WHT and remiited to KRA.
2.Depends on how he has registered his business.Generally you want to separate the individual from the business.
3)For consultancy income the WHT is normally the final tax.If you have other sources of income,then graduated scale rate will be used to calculated the tax payable and then deduct the WHT since it has already been paid.
4If one has been out of employment,then they need to file zero returns to show this otherwise iko penalty.
Consistency is better than intensity
chiaroscuro
#32 Posted : Friday, April 24, 2015 1:27:00 PM
Rank: Veteran


Joined: 2/2/2012
Posts: 1,130
Location: Nairobi
PeterReborn wrote:
nakujua wrote:
PeterReborn wrote:
Swenani wrote:
PeterReborn wrote:
kenmac wrote:
Swenani wrote:
ChumviMacho wrote:
Hello Wazuans,


I am desperate to reduce my taxes and wonder if anyone has tips on reducing their income tax. I have taken out an education policy and a HOSP (Home Ownership Savings Plan)but the saving is marginal. I know taxes are certain in life but wonder if you guys have other ideas on trimming your payables to KRA?

I am employed and run a small biz on the side. Inflation is biting hard and I am beginning to feel the heat in my pocket.

Again, there was talk last year about widening the tax bands, is that something we can lobby for? methinks taxing anyone earning less than 20K is immoral and for people earning less than 50K to be at the top rate is just not fair?

Any thoughts, ideas?


Register a company,then ask your current employer to employ you as a company and not as an individual.smile



Brilliant answer.

Will you not pay the corporate tax @30% which will be higher than the graduated scale rates?


When your register a company,you can be able to deduct the following expenses creatively before taxation
1.Fuel /transport costs
2.WTA on your house(Register your house in the company's name and call it office premises)
3.Meals for your and your family(your can call it employee meals or employee welfare)
4.House keeping expenses(Office maintenance)
5.Savings
6.House helps salary(You can call it wages to casuals
etc.
7.Buy a company car and charge WTA.
8.Charge WTA on your company(of course its yours) electronics(TV;s phones, computers etc), furniture etc

Deduct everything and declare a loss to KRA

Laughing out loudly Laughing out loudly Laughing out loudly You are a genius.

wewe @Swenani, naona wewe ni genius - saidia hapa.

my neighbor came across some guys willing to hire them as a consultant na waka kubaliana the coins they will pay after my neighbor delivers on some tasks;

my neighbor asked me these questions nikamwambia sina time, will answer him latter.

1. They say they will take care of withholding tax - sijui how that works. saidia hapo

2. can one invoice under their name, ama one must register a ka business name for that, if not does one weka pin number hapo kwa invoice.

3. how does consultancy income reflect on ones tax obligation, and must your pin be online.

4. if one has been out of employment for a very long time, will that ka gap in the tax records have issues.

niambie jirani nini? anyone who knows hii mambo saidia naomba smile


Withholding tax is tax deducted at the source.If you are a consultant,you wont get the full invoice amount.some amout will be deducted by the customer and remitted to KRA.He needs to get a WHT certificate from the customer to confirm that the amount deducted was for WHT and remiited to KRA.
2.Depends on how he has registered his business.Generally you want to separate the individual from the business.
3)For consultancy income the WHT is normally the final tax.If you have other sources of income,then graduated scale rate will be used to calculated the tax payable and then deduct the WHT since it has already been paid.
4If one has been out of employment,then they need to file zero returns to show this otherwise iko penalty.


No!

It is not a final tax!
Ericsson
#33 Posted : Friday, April 24, 2015 8:44:43 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,057
Location: NAIROBI
NHIF ndio hiyo deduction pap
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
jerry
#34 Posted : Friday, April 24, 2015 10:47:23 PM
Rank: Elder


Joined: 9/29/2006
Posts: 2,570
Ericsson wrote:
NHIF ndio hiyo deduction pap

That means you've your April pay!
The opposite of courage is not cowardice, it's conformity.
Stealth
#35 Posted : Friday, May 01, 2015 1:35:16 PM
Rank: Member


Joined: 5/3/2010
Posts: 145
Location: East Africa
Business tax avoidance

Abstract Case:

A business has an annual turnover of kshs 5m and a profit of 2m. TOT of 3% takes out kshs 150k from the profit leaving kshs 1.85m.

Anticipating increase of revenue to kshs 7m and profit to kshs 2.8m. corporate tax will take 30% of profit (kshs 840,000).

My thoughts: If someone splits the biashara into two units so as to keep the biashara within TOT threshhold. This would mean the kshs 7m revenue would give a tax of Kshs 210,000 against a tax of about Kshs 840,000 under the corporate tax. A saving of about Kshs 630,000.

what do you think? workable?
Nimerudi
#36 Posted : Friday, May 01, 2015 8:42:26 PM
Rank: New-farer


Joined: 1/21/2015
Posts: 78
Location: Pare Pare
Stealth wrote:
Business tax avoidance

Abstract Case:

A business has an annual turnover of kshs 5m and a profit of 2m. TOT of 3% takes out kshs 150k from the profit leaving kshs 1.85m.

Anticipating increase of revenue to kshs 7m and profit to kshs 2.8m. corporate tax will take 30% of profit (kshs 840,000).

My thoughts: If someone splits the biashara into two units so as to keep the biashara within TOT threshhold. This would mean the kshs 7m revenue would give a tax of Kshs 210,000 against a tax of about Kshs 840,000 under the corporate tax. A saving of about Kshs 630,000.

what do you think? workable?



That is a simple yet valid case of tax planning. The arrangement should work as it fits the TOT specifications. However, arrangements should be laid well in advance.
Nimerudi
#37 Posted : Friday, May 01, 2015 9:43:20 PM
Rank: New-farer


Joined: 1/21/2015
Posts: 78
Location: Pare Pare
Chaka wrote:
Is there such a thing as a LLC having only one director?Is a sole proprietor Co. also entitled to those WTA deductions?



As per the Companies Act (cap 486), an LLC can only have a minimum of 2 and maximum of 7 directions.

On the sole proprietorship question, Withholding tax is a form of Income Tax. As such, one is entitled to deductions. Check the list of deductions/ Incentives for individual taxpayers here.

essyk
#38 Posted : Monday, April 19, 2021 5:53:04 PM
Rank: Elder


Joined: 11/15/2011
Posts: 4,510
Lolest! wrote:
whiteowl wrote:
murchr wrote:
Swenani wrote:
PeterReborn wrote:
kenmac wrote:
Swenani wrote:
ChumviMacho wrote:


Register a company,then ask your current employer to employ you as a company and not as an individual.smile



Brilliant answer.

Will you not pay the corporate tax @30% which will be higher than the graduated scale rates?


When your register a company,you can be able to deduct the following expenses creatively before taxation
1.Fuel /transport costs
2.WTA on your house(Register your house in the company's name and call it office premises)
3.Meals for your and your family(your can call it employee meals or employee welfare)
4.House keeping expenses(Office maintenance)
5.Savings
6.House helps salary(You can call it wages to casuals
etc.
7.Buy a company car and charge WTA.
8.Charge WTA on your company(of course its yours) electronics(TV;s phones, computers etc), furniture etc

Deduct everything and declare a loss to KRA


Yes, if you are working online. Not practical otherwise

You can declare some small profit so as not to spook KRA guys

I know some one man show that runs with some of Swenani's ideas

The owner's car is a company car. The wife and mum's car are also serviced by the company

Claims meals from the company

Supermarket shopping

Drawings are incorporated into expense lines


Laughing out loudly Laughing out loudly Laughing out loudly Laughing out loudly Laughing out loudly Laughing out loudly

That's why they introduced that minimum tax nonsense that has just been quashed by the High Court.

But..Laughing out loudly Laughing out loudly Laughing out loudly
"The true measure of a man is how he treats someone who can do him absolutely no good.
Elephant Man
#39 Posted : Saturday, May 01, 2021 8:54:25 PM
Rank: Member


Joined: 12/24/2008
Posts: 105
With thresh-hold on TOT being raised to Kshs. 50m from Kshs. 5m on annual turnover, and with a tax reduction on turn-over rate of 1% from 3% previously- this is very attractive for SME's.

Could be the reason KRA/iTax making taxpayers wanting to migrate to this regime jump through hoops - mara you must be tax compliant, then you must have filed your returns for FY 2020, mara your application will be vetted by KRA before consideration is given to permit you to migrate to TOT etc.
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