Resident and Non resident..The Difference

INCOME TAX ACT “Individual” is defined as a natural person. “..A tax known as income tax shall be charged...for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.” “...income upon which tax is chargeable... Is income in respect of – (a) Gains or profits from... employment or services rendered... (c) Pension, charge or annuity...” Who then is liable to tax on employment income? Individuals are liable to tax on employment income as follows: i). resident individuals - taxable on worldwide employment income ii).non-resident individuals - taxable on the income received from employment with: A Kenya resident company or permanent establishment in Kenya of a non-resident company (e.g. Kenyan branch of foreign company) Employment income is the amount paid to: a) A person who is, or was at the time of the employment, a resident person in respect of any services rendered by him in Kenya or outside Kenya. b) Non-resident person in respect of any employment with or services rendered to an employer who is resident in Kenya or the permanent establishment in Kenya of an employer who is not so resident.

Employment Income

INCOME TAX ACT “Individual” is defined as a natural person. “..A tax known as income tax shall be charged...for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.” “...income upon which tax is chargeable... Is income in respect of – (a) Gains or profits from... employment or services rendered... (c) Pension, charge or annuity...” Who then is liable to tax on employment income? Individuals are liable to tax on employment income as follows: i). resident individuals - taxable on worldwide employment income ii).non-resident individuals - taxable on the income received from employment with: A Kenya resident company or permanent establishment in Kenya of a non-resident company (e.g. Kenyan branch of foreign company) Employment income is the amount paid to: a) A person who is, or was at the time of the employment, a resident person in respect of any services rendered by him in Kenya or outside Kenya. b) Non-resident person in respect of any employment with or services rendered to an employer who is resident in Kenya or the permanent establishment in Kenya of an employer who is not so resident.

DEACTIVATION OF PIN

Take note Taxpayers NOT register on the iTax platform risk having their personal identification numbers (PIN) deactivated by the taxman. Majority of the do not file returns and therefore have not been captured in Tax system KRA claim majority of the tax payers and those with business are not filling annual returns at all or where they file they are filling nil returns despite them operating active business or earning taxable incomes. KRA has warned all tax payers not yet migrated to the ITAX platforms, those who have not filed their annual returns and those filing nil returns risks their PIN being Deactivated. It must be noted that KRA has increased penalties associated with failure to file returns from Kshs 1000 to Kshs 20,000 in addition to paying all taxes dues, interests and penalties. Note that the penalty of not filing returns does not exempt the tax payers from the obligation of paying taxes previously not It must be noted by all Tax payers that government payments systems have been linked to the online tax register and therefore all suppliers and service providers providing or trading with the government can no longer cheat on their tax payable. Its is our humble advice to all person with PIN to monitors their taxes religiously and as they monitor their cash flow to avoid heavy penalties that can cause devastating effect on any individual or organization cash flow. It must be noted by all tax payers on the Tax Procedures Act 2015, where failure to file returns within the deadline is an offence which attracts a Sh10,000 fine or 25 percent of salaried workers’ tax bill, Sh5,000 in case of small and medium sized enterprises which are subject to turnover tax and Sh20,000 or five percent of tax liability on other business incomes.

DEACTIVATION OF PIN

Take note Taxpayers NOT register on the iTax platform risk having their personal identification numbers (PIN) deactivated by the taxman. Majority of the do not file returns and therefore have not been captured in Tax system KRA claim majority of the tax payers and those with business are not filling annual returns at all or where they file they are filling nil returns despite them operating active business or earning taxable incomes. KRA has warned all tax payers not yet migrated to the ITAX platforms, those who have not filed their annual returns and those filing nil returns risks their PIN being Deactivated. It must be noted that KRA has increased penalties associated with failure to file returns from Kshs 1000 to Kshs 20,000 in addition to paying all taxes dues, interests and penalties. Note that the penalty of not filing returns does not exempt the tax payers from the obligation of paying taxes previously not It must be noted by all Tax payers that government payments systems have been linked to the online tax register and therefore all suppliers and service providers providing or trading with the government can no longer cheat on their tax payable. Its is our humble advice to all person with PIN to monitors their taxes religiously and as they monitor their cash flow to avoid heavy penalties that can cause devastating effect on any individual or organization cash flow. It must be noted by all tax payers on the Tax Procedures Act 2015, where failure to file returns within the deadline is an offence which attracts a Sh10,000 fine or 25 percent of salaried workers’ tax bill, Sh5,000 in case of small and medium sized enterprises which are subject to turnover tax and Sh20,000 or five percent of tax liability on other business incomes.

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