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List of businesses eligible for tax benefits; How to apply

List of businesses eligible for tax benefits and guidelines for applicants of the Preferential Corporate Tax Rates.

The Government of Kenya on Thursday, January 5, issued guidelines for applicants of the Preferential Corporate Tax Rates for five business clusters operating in the country.

The Preferential Corporate Tax Rates, if passed, would grant some taxpayers a partial exemption from the fixed tax rate for particular businesses.

The tax-collection agency Kenya Revenue Authority (KRA) stated that five different types of businesses were eligible for the waivers.

The companies include those in the construction business, motor vehicle assembly business, shipping business, carbon market exchange business, and those under a special operating framework arrangement, 

Businesses in the construction business are required to have constructed at least one hundred residential units annually.

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The report explained that “companies whose business involved the assembling of motor vehicles locally are subject to approval by the Cabinet Secretary responsible for housing.”

Businesses involved in the carbon market, on the other hand, were expected to be certified by the government.

“Companies whose business involved operating a carbon market exchange or emission trading system that is certified by the Nairobi International Financial Centre Authority (NIFCA),” the report added. 

KRA noted that applications were to be done through their online service iTax, including attachments of all required documents.

There were, however, laid down procedures and guidelines for the application process including; 

The Authority instructed that the applications must have been submitted three months prior to the end of the accounting period. 

Applications would be subject to review by the commissioner against the checklist and carry-out inspections of the business premises. 

“During the verification, the Commissioner may request for additional documentation,” the report stated.

Approval would only take place when the commissioner is satisfied that the taxpayers have met all prescribed requirements.

“When the commissioner approves, a Preferential Rate Certificate shall be generated and auto-delivered to the taxpayer’s registered email,” the report added. 

However, if the commissioner is not satisfied, the application will be rejected and an email of the rejection notice, stating the reasons for rejection, will be sent to the taxpayer’s registered email.

The Kenya Revenue Authority (KRA) had on January 3, filed a notice with the Supreme Court to appeal the High Court’s ruling that the minimum tax imposed on businesses was unconstitutional.

KRA aimed to obtain a favorable ruling that would permit the annual collection of billions from businesses, regardless of whether they were successful.

The minimum tax, according to the authority, is based on gross turnover rather than gains or profits, and all enterprises, including those that are losing money, are compelled to pay it.

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