If you are an adult living in Kenya, whether Resident or Non-Resident, the law requires that you to file a tax return declaring any income earned within or outside Kenya from the various sources viz., Employment, Business, Rental, Interest, Farming and others in the previous calendar year.

It is important to note that these different sources of income are taxed separately and are not to be aggregated.

Since all tax returns are filed and various applications initiated through the iTax platform, The Tax Procedures Act of 2015 stipulates punitive penalties for non-compliance.

For purposes of this tax tip, we shall limit the discussion to Business income.

Tax is charged as a percentage of profits earned during the year. For Resident companies, it is at the rate of 30% while it is 37.5% for Non-resident companies.

It is mandatory that an Audit Certificate is issued upon filing of a company’s Income Tax Return (IT2C) by a practicing Accountant who must audit the Accounts and sign them.

For sole-proprietorships, i.e. businesses registered under a Business Name, the income of the business is aggregated with the proprietor’s other sources of income e.g. from farming, rental etc.  and the profit, if any, taxed at the normal graduated scale through Form IT1.

Though not compulsory, it is advisable that such Accounts are also audited so as to provide some degree of Assurance to the relevant stakeholders who may need to rely on them for decision making.

Eddy – CPA, MBA