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Brief Overview of the Taxation System of Kenya

Like most of the rapidly developing nations, Kenya too has taxation as one of the main sources of revenue. This has necessitated the citizens to understand the technicalities associated with this rather niche domain, and has increased the significance of tax consultancy services in Kenya. The government of Kenya uses the tax revenue for various developmental purposes and in order to provide essential public services to the citizens. It has been observed that Kenya’s tax performance has improved significantly since the the past two decades. Due to enhanced contributions to the national coffer, the government has been able to finance more than half of its budget. It goes without saying that the tax structure of any nation determines the taxation practices as well as the tax performance and tax revenues. As the tax structure is shaped by governmental policies, they are subject to modifications from time to time. It is more of a reality that most people need assistance to stay updated and educated on these changes and plan their taxes accordingly. These would help them avoid penalties, pay taxes correctly, and contribute towards the progress of the nation. All these requirements call for professional expertise that is provided by tax consultancy services in Kenya.

Vital Role of Tax Consultancy Services in Kenya

Owing to the importance of national tax policies, making effective decisions often becomes a serious issue for the general public as well as businesses. As these decisions contribute towards shaping the economy and augmenting its viability, tax consultancy services in Kenya play a vital role in educating citizens about the significance of taxation and help them in tax-planning. The government of Kenya pursues a fair tax system that is simple, adequate and neutral, and it ensures that the citizens enjoy an equitable distribution of both income and welfare. Although the taxation system is driven by central policies that mandate contributions against any kind of taxable incomes and gains, the underlying objective is to generate funds that can be put to use to build a sustainable economy. Whilst it is the duty of a responsible citizen or business to maintain punctuality while paying taxes, it is also paramount to understand the different tax categories and tax saving options. Under these circumstances, Ronalds & Associates, renowned for offering some of the best tax consultancy services in Kenya, can provide optimum professional support. We have a vast experience in the fields of financial advisory and tax consultancy services. Armed with this experience, we can deal with a wide range of tax affairs that pertain to individuals as well as corporates in various industrial sectors.

The tax structure of Kenya is commonly divided into direct and indirect taxes. Direct taxes are paid by individuals as personal taxes. These can also be paid directly by employers, on behalf of the taxable individuals, to the designated tax collection agency. However, the cost of direct tax is always borne by the taxable individual and not by anyone else. Income tax, trade royalties, etc. come under the direct tax category. In contrast, indirect taxes are not borne directly by the taxable individual. These taxes are, instead, transferred to third parties, such as consumers of goods, end users of services, etc. Although indirect taxes are paid by sellers or service providers, the tax burden is shifted to customers through prices of goods and services. The most common indirect taxes are excise duty and Value Added Tax (VAT). As it difficult for laymen to understand the intricacies of such an elaborate tax system, they often find themselves trapped in tricky situations and end up calculating their tax amounts incorrectly. Only professional tax consultancy services in Kenya can provide them the necessary assistance. The Kenyan tax system characteristically spreads the tax revenue across various tax instruments that are direct as well as indirect. The advantage of such a strategy is that it strengthens the national fiscal system and enables it to endure economic fluctuations while minimizing the burden of tax on any particular taxpayer groups or economic sectors. Although it sounds conceptually idealistic, which it actually is, the tax system becomes difficult for many individuals to comprehend. Owing to this, it has been observed that many have failed to appreciate the intention of the government to promote savings and investments by reducing stress on income taxes. Tax consultancy services in Kenya can help them plan their taxes in ways that would enable them to maximize savings and better their financial positions.

General Aspects of Tax Consultancy Services in Kenya

Speaking generally, the activities of major tax consultancy services in Kenya should include six major items. These are briefly outlined below:

  1. Reviewing the accounting system of the client and subsequently determining whether there is adequate compliance with every tax requirement. Following these, the tax consultancy services in Kenya must report non-conformities, if any, and suggest necessary corrective actions.
  2. Computing as well as advising on annual corporate taxes that are payable by the client. Additionally, providing information on the tax submission dates.
  3. Conducting due diligence on the tax status of the clients, both in terms of the company and that of the directors.
  4. Completing the statutory tax returns of individuals as well as companies, and submitting them on or before the due dates.
  5. Review the annual Pay As You Earn (PAYE) returns, and submitting them on or before the due dates.
  6. Providing telephone and email support on different tax matters that might arise from certain unique transactions.

Ronalds & Associates can provide the best-in-class tax consultancy services in Kenya and ensure that your taxes are planned in the most effective manner and submitted on time.