Eltax Consultants CPA-K

20/01/2025

The Tax Laws (Amendment) Act, 2024 Act introduced several provisions that have an impact on the taxation of employees with effect from 27th December 2024. Below is a summary of the key changes relevant to payroll processing as introduced by the Act.

1. Removal of certain housing reliefs- The Affordable Housing relief and the Post-retirement Medical Fund relief are repealed, which were previously available to taxpayers. Contributions to these funds will now be deductible when determining taxable income for PAYE. Consequently, the only available reliefs will be the Personal relief of KSHs 28,800 annually (KSHs 2,400 monthly) and Insurance Relief at 15% on premiums for life, health, or education policies, capped at a maximum relief of KES 5,000 per month (or KES 60,000 per year).

2. New Tax-Deductible Contributions;

· Employee contributions under the Affordable Housing Act, 2024, are now tax-deductible.
· Contributions to the Social Health Insurance Fund (SHIF), replacing NHIF, are also tax-deductible.
· Contributions to post-retirement medical funds are deductible, up to KShs15, 000 per month.
· Mortgage interest has increased to KSHs 360,000 per year (KSHs 30,000 per month) from KSHs 300,000 per year (KSHs 30,000 per Month).
· Contributions made to registered pension/provident fund has increased to KShs 360,000 per year (KShs 30,000 per month).

3. Tax-Free income

· Any benefit, advantage, or facility received by an employee that has an aggregate value of less than KShs 60,000 per year (KSHs 5,000 per month) will not be subject to tax.
· The tax-free threshold for employer-provided meals has increased to KShs 60,000 per year (KSHs 5,000 per month).
· Contributions made by an employer to registered individual retirement funds or public pension schemes, as gratuities or similar payments for each year of service, have been increased to KShs 360,000 per year (KShs 30,000 per month).

Notably there are other changes that have taken place in the recent past such are;

· Increase in National Social Security Fund (NSSF) contributions that took effect in February 2023 and a further increase is expected February 2025.
· Operationalization of Social Health Insurance Fund (SHIF) contributions in October 2024.
· The re-introduction of Affordable Housing Levy contributions in March 2024.
· Changes in Pay As You Earn (PAYE) rates with effect from July 2023.
· Changes in government fees related to application of immigration documents.

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09/01/2025

We are Hiring
Tax and Audit Assistant
CPA Qualifications required
1 year working experience
Location Nakuru
Dateline for Applications 16th Jan
Email [email protected]

14/10/2024

18/01/2024

KRA’s demand that Taxes be settled within a particular period must be backed by a Tax Law. Any contrary demand to this is Invalid.

NJAMA WAMBUGU Vs COMMISSIONER OF INVESTIGATIONS AND ENFORCEMENT
-The KRA carried out a Tax audit on the Taxpayer for the years of income 2013-17 and on 12th October, 2018 served the Taxpayer with their findings and demanded income tax of KShs. 27.378M
-The Taxpayer through his tax agent gave his notice of objection on 17th October, 2018, further providing additional documents to support his case. It is from this additional information that KRA issued an additional assessment of KShs. 61.793M being unreported income, inclusive of penalty and interest. This being the final objection decision.
-Further to this objection decision dated 19th February, 2019, KRA wrote to the Taxpayer demanding a Bank Guarantee of KShs. 39,627,989.00 within the next seven days from 27th February, 2019, being the date of the notice. The purpose of the Bank guarantee was to secure the payment of principal taxes amounting to KShs. 29,553,838.00 and accrued interest of KShs. 10,074,151. The Taxpayer objected this decision to TAT.
ISSUE FOR DETERMINATION
-Whether the assessment was based on applicable relevant law and all material facts considered?
-The TAT referred to Sec 29(2) (e) of the Tax Procedures Act … “the Commissioner shall notify in writing a tax payer assessed under subsection (1) of the assessment and Commissioner shall specify (e) the due date for payment of the tax, penalty, and interest, being a date that is not less than 30 days from the date of service of the notice”.
-In KRA letter dated 12th October, 2018 it reads in part, on page 5 as follows; “arrange to settle the outstanding taxes and provide explanations where available within seven (7) days from the date of receipt of this demand letter”. The KRA its own wording is referring to this letter as a demand yet the notice period given of seven days has no legal basis.
-The TAT noted that KRA gave the Taxpayer seven days’ notice to pay what it termed as additional assessment without affording the requisite statutory period for him to object to the demand. The said action was arbitrary, unreasonable and in breach of the laid down legislation. The appeal succeeded.

15/01/2024

TAX COMPLIANCE: WHAT BUSINESSES NEED TO KNOW FOR TAX COMPLIANCE, 2024.

As we step into 2024, it is fundamental for businesses to understand tax compliance to avoid penalties, legal issues and ensure smooth operation in the landscape of the Kenyan tax environment.

In this guide, we explore the key aspects of tax compliance in Kenya for 2024 and provide insights into how businesses can navigate the dynamic tax environment.

1. Obtaining a Tax Personal Identification Number (PIN)
This is the first step for tax compliance. Whether you are an individual taxpayer or a business entity, you need a PIN to carry out financial transactions, file tax returns, and other tax issues.

2. Updates in Tax Legislation
The implementation of the Finance Act 2023 entered its third phase in January 1, 2024, with the government seeking improved income tax compliance by businesses and landlords. Staying abreast of the regulations in the Finance Act 2023 and adopting proactive strategies is crucial for maintaining financial health and compliance.

3. Proper Bookkeeping
Bookkeeping is the most important practice of every business. Maintaining accurate and up-to-date financial records is essential for tax compliance. Ensure that every business transaction is supported with a valid supporting document.

4. Understanding Your Tax Obligations
It is fundamental for every business owner and individuals to understand the type of taxes they pay for proper tax compliance. The common types of taxes in Kenya include.
a) Income Tax
b) Rental Income Tax
c) Value Added Tax
d) Excise Duty
e) Capital Gains Tax
f) Turnover Tax

5. Tax Filing and Payment Deadlines
Ensure you are aware of the various tax filing and payment deadlines. For instance, income tax returns for individuals are usually due by June 30th of the following year, while corporate tax returns are due six months after the end of the financial year. Missing these deadlines can result in penalties and interest charges.

6. Utilizing Tax Incentives
While ensuring compliance is paramount, businesses should also explore opportunities to leverage available tax incentives and help utilize your tax position. Understanding and strategically applying incentives provided by the government can help optimize tax positions and contribute to overall financial efficiency.
A major tax incentive to utilize is the Tax Amnesty which is valid up to 30th June 2024.

7. Engaging Tax Professional
Engaging a tax professional or accountants well-versed with the Kenyan tax laws is a prudent decision to ensure compliance with tax regulations and guidance in complex tax issues.

By understanding this, businesses are able to comply with the tax authority therefore avoiding penalties and legal issues

01/09/2023

TAX MANAGEMENT GUIDE
Tax Planning
Tax Planning is the process of designing a strategy to reduce a company’s or individual tax liability.
Its important for companies/organizations to effectively plan on ways to reduce tax liabilities and avoid penalty, interests that may accrue due to late payment and non compliance.
Companies can consider below strategies to minimize their tax burden;
1. Debt Financing
An entity can finance its operations using debt as opposed to equity since Interest on loans is an allowable expense. The interest expense is offset against taxable profits thereby reducing tax liability.
2.Maximizing on input VAT claim.
Companies should ensure that they make all their purchases of Vatable goods and services from suppliers who are VAT compliant to be able to claim input VAT. Every purchase should have the VAT element and subsequently used to offset Vat payable.
3.Tax Compliance /Timely Filing and Payment of taxes
A good number of companies have substantial tax penalties and interests on their tax ledgers that have accrued over a period. Non-compliance is a costly affair for a business. Entities should therefore be aware of their tax liabilities, filing and payment due dates and comply. The tax liability/burden becomes huge if not filled and paid within the timelines.
4. Seeking the services of a Tax Expert
Engaging a competent tax consultant enables individuals and corporate entities to conduct their affairs in compliance with existing tax laws. Experts are able to advise on the recent changes in the tax laws, and help in the interpretation of the unclear sections of the Tax Acts.

22/08/2023

Good News to Clients,
Kenya Revenue Authority amnesty on Penalties and Interests will be effected from 1st September 2023.Clear all principal tax due and enjoy 100% waiver on penalties and interest. Talk to me today so that i can assist on the application process.

15/08/2023

TAXES

A framework for Tax Planning

You aspire to a successful career?
Make sure to understand Tax

👉 Let me help you with my framework:

Timely compliance

Appropriate deductions

Xpert consultation

Entity structure

Strategic planning

Here is how it articulates (feel free to bookmark it for yourself):

T - Timely Compliance:

Timely tax filing and payment can avoid penalties and interest

- Develop a tax calendar to track deadlines
- Prepare and file tax returns promptly
- Ensure timely payment of tax liabilities

A - Appropriate Deductions:

Claiming all appropriate deductions can reduce tax liability

- Identify all potential tax deductions
- Maintain proper documentation for deductions
- Claim all applicable deductions in tax returns

X - eXpert Consultation:

Professional advice can result in significant tax savings

- Engage a tax consultant for complex issues
- Implement advice on tax planning strategies
- Keep up to date with tax law changes via expert guidance

E - Entity Structure:

The right business entity can optimize tax obligations

- Evaluate tax implications of different business structures
- Consult with a tax advisor to choose the right entity
- Review and update entity structure as needed

S - Strategic Planning:

Proactive tax planning can optimize tax efficiency

- Develop a strategic tax plan
- Implement tax-efficient investment strategies
- Monitor changes in tax laws and adjust the plan as needed

21/07/2023

Call is today for everything Taxes and Planning

12/07/2023

Many taxpayers have been troubled by tax penalties and interest for a long time. Perhaps, your application for waiver of penalties and interest has been rejected. Here are some of the changes brought about by the recently passed finance Act.
The commissioner shall refrain from recovering penalties or interest on tax debts for taxpayers who had fully paid their principal tax by the end of 2022.
If you had not paid all of the principal tax due before that date, you may apply to the Commissioner for an amnesty of interest or penalties on the unpaid tax and propose a payment plan for the outstanding principal amount for penalties on the unpaid tax that have accrued up to December 31, 2022.
Also note that;
The amnesty shall only be granted once if a person applies for it, pays all outstanding principal taxes before the deadline of June 30, 2024, does not accrue any more tax debts, and signs a commitment letter for the payment of all outstanding taxes owed.

12/06/2023

Job Opportunity!!!
My client in hospitality industry seeks an Accounts Clerk to be based in Nakuru Town. ATD or Diploma in Accounts Qualifications with at least 1 year experience in Book Keeping and submission of Statutory Returns in a busy environment is a MANDATORY requirement. Drop your CVs on [email protected] by COB 15th June 2023. Candidates who meet the requirements to apply. Salary is between Kshs 15,000 to 20,000.

29/05/2023

Filing tax returns is an essential part of any individual or organization's financial responsibilities, and it serves several important purposes, including:

1.Compliance with the law: Filing tax returns is a legal requirement in Kenya just like any country around the globe , and failure to comply result in fines, penalties, or even legal action.

2.Accurate assessment of tax liability: Filing tax returns helps ensure that individuals and organizations accurately calculate their tax liability based on their income, deductions, and credits.

3.Eligibility for tax refunds: If an individual or organization has overpaid taxes during the year, filing a tax return is necessary to claim a refund.

4.Creditworthiness: Filing tax returns is often required when applying for loans or a job, as it demonstrates an individual or organization's financial stability and income.

5.Avoidance of audits: Filing tax returns in a timely and accurate manner can reduce the likelihood of being audited by tax authorities like KRA, which can be a time-consuming and stressful process.

6.Future planning: Tax returns provide a record of an individual or organization's financial activities, which can be used for future planning and decision-making.

In case you need assistance in filling your returns be it vat, paye or any other income tax you can reach out to me.