• August 18, 2023
  • Raf Peter
  • 0

People from all around the world are finding possibilities to live, work, and invest in countries other than their own in an increasingly interconnected world. Kenya, with its diverse economy and rising international presence, has emerged as an appealing destination for non-Kenyans seeking such chances. However, along with the advantages of international mobility, there are also very significant difficulties, particularly in the area of taxation. In this article, we will look at the important tax difficulties that non-Kenyans should be aware of when managing their finances in Kenya.

Residency and Taxation.

The resident status of a non-Kenyan citizen is one of the key elements that determines their tax responsibilities in Kenya. Kenya, like many other countries, imposes taxes based on both source and residence. A person is regarded a tax resident in Kenya if they spend more than 183 days in the nation during the fiscal year or if they have a permanent residence in Kenya. Tax inhabitants are subject to worldwide income taxation, which means that money earned both within and outside of Kenya is subject to taxation.

Non-residents, on the other hand, are normally solely taxed on income earned in Kenya. Non-Kenyan citizens working or conducting business in Kenya may find that, only money earned within the country is liable to taxation.

Double Taxation Agreements.

Kenya has engaged into Double Taxation Agreements (DTAs) with various countries to relieve the hardship of its non-citizens being taxed on the same income in multiple countries. These treaties seek to avoid double taxation by establishing criteria for assigning taxing powers among contracting countries. Non-Kenyans who are tax residents of a nation with whom Kenya has a DTA can benefit from lower or no taxation on certain types of income they earn.

Types of Income and Taxation.

Employment Income: If you work in Kenya as a non-resident, your remuneration is usually subject to withholding tax. The withholding tax rate may differ based on your resident status and whether or not your nation has a Double Taxation Agreements (DTAs) with Kenya.

Business Income: Non-Kenyan citizens who participate in commercial operations in Kenya may be liable to corporate income tax. Businesses typically pay 30% of their annual net income in taxes.

Rental revenue: Rental revenue received from Kenyan property is taxed as well. Non-residents are taxed on rental income at a fixed rate of 30%.

Capital Gains Tax: Capital gains tax is a type of tax levied on gains obtained from the sale of Kenyan property or assets. Non-residents are taxed on such gains at a rate of 5%.

Dividends, Interest, and Royalties: Withholding tax is charged to dividends, interest, and royalties paid to non-residents. The prices may differ depending on the manner or form of payment and any applicable Double Taxation Agreements (DTAs) with Kenya.

Compliance and Reporting.

Non-Kenyans must always guarantee that Kenyan tax regulations are followed to the latter. Obtaining a Personal Identification Number (PIN) from the Kenya Revenue Authority (KRA), filing tax returns, and paying taxes on time are all part of this. Failure to meet all these commitments which are considered to be very necessary, may result in penalties and legal ramifications on the non-resident.

Conclusion.

While Kenya provides numerous options for non-Kenyans, it is critical to understand the tax implications of living, working, or investing in the nation before making a final decision to stay and also to set up some businesses. Tax concerns necessitate careful preparation, respect to legal regulations, and even obtaining professional help. Non-Kenyan citizens can make the most of their experiences in Kenya while also meeting their tax requirements if they keep aware and vigilant of the tax system in the country.

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