Legal Digest January 2017

In our continuous endeavor to keep you informed, please see attached a synopsis highlighting some notable legal and tax issues in the month of January 2017. 

This month, we highlight the recently enacted Bribery Act and also remind you of some of the key provisions of the Finance Act 2016 whose commencement date is January 2017.

Insight into Management and Control from Kenyan Perspective

Kenya’s tax system is territorial where tax is charged upon income accrued or derived in Kenya. The Income Tax Act(“ITA”)sets out a myriad of scenarios where income is deemed to be accrued or derived in Kenya and is, in a big way, dependent on the concept of residence. Of importance to this article is the concept of residence as applied to corporate entities or as the ITA calls them “a body of persons”.

The Mutuality Principle

The Cabinet Secretary to the Treasury had, in the budget speech of financial year 2015/2016 and 2016/2017,reiterated the government’s intention to revise the Income Tax Act as part of the review and modernization process that commenced in 2011, with the revision of the VAT Act and the Excise Acts. The Income Tax Act is greatly borrowed from the United Kingdom (UK), Kenya being one of the colonies and a member of the Common Wealth nations. 

Link: The Mutuality Principle

Financial Act 2016

The Finance Bill 2016 was tabled in the National Assembly by the Cabinet Secretary (“CS”) National Treasury on 8th June 2016. The same has been extensively debated by the Members of the Assembly and the final Bill was assented by the President on 13th September 2016. The Act introduces amendments to the Income Tax Act (“ITA”), Value Added Tax 2013 (“VAT Act”), the Excise Duty Act 2015 (“Excise Act”), the Tax Procedures Act 2015 (“TPA”) and various other Acts under the Miscellaneous Provisions. We analyze the amendments below;

See amendments: Financial Act 2016

The Tax Procedures Act

The Tax Procedures Act, 2015 (“TPA”) was assented into law on 15th December, 2015 and came into effect on 19th January, 2016 vide Legal Notice no. 12 of 2016.

Link: Tax Procedures Act

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