KENYA Law and Practice Contributed by: Anne Kinyanjui and Bonface Abuya, DLA Piper Africa, Kenya (IKM Advocates)
operator or enterprise to a non-resident per - son are exempt from tax for the first ten years of the establishment of the SEZ developer, operator or enterprise; • where possible, acquiring the shares of the landowner instead of purchasing land directly to reduce the stamp duty amount payable by them. However, the seller may be required to pay CGT in such instances (see 2.10 Taxes Applicable to a Transaction ); • investing in special programmes such as the AHS, which benefits from various tax incen - tives; or • taking advantage of any existing statutory tax exemptions. 8.3 Municipal Taxes The landlord or owner is obliged to pay land rates to the relevant county government if the business premises are within an urban area. Ten - ants may contribute towards land rates by way of the payment of service charges. 8.4 Income Tax Withholding for Foreign Investors WHT Foreigners are subject to WHT, which is levied at different rates depending on the category of income earned. The rate also depends on whether the foreigner is a resident or a non-res - ident. WHT is 30% on rental income earned by a non-resident, 15% on dividend and interest income earned by a non-resident, and 20% on professional fees earned by a non-resident. WHT is deducted by the payer at source and remitted to the KRA. Interest earned from loans obtained from foreign sources for purposes of investing in the energy or water sectors, or in roads, ports, railways or
aerodromes is exempt from WHT pursuant to Legal Notice No. 91 of 2015. CGT Gains from the disposal of real estate are subject to CGT; see 2.10 Taxes Applicable to a Trans- action . Rental Income Tax Rental income tax is paid by residents earning annual rental income of between KES288,000 and KES15 million. The tax is charged monthly at the rate of 7.5% of gross rent received per month. No expenses or capital deductions are allowed to be deducted while calculating the tax. This tax is not applicable to non-residents. Rent - al income earned by a non-resident is subject to WHT at the rate of 30% of the gross rental There are no specific tax benefits from owning land. However, the following expenditures are allowable deductions when determining a per - son’s taxable income: • capital expenditure incurred on legal costs and stamp duty in connection with the acqui - sition of a lease for a period not exceeding 99 years of premises to be used for business purposes; • capital expenditure by the owner or occupier of farmland for the prevention of soil erosion; • sums expended during a year of income for structural alterations to the premises where the expenditure is necessary to maintain the existing rent (this does not include the exten - income received. 8.5 Tax Benefits sion or replacement of the premises); and • capital expenditure incurred by the owner or tenant of agricultural land in clearing that land
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