Tax

Tax law in Kenya is a complex and rapidly evolving field, governed by the Income Tax Act (Cap 470), the Value Added Tax Act, 2013, the Excise Duty Act, 2015, the Customs and Excise Act, the Tax Procedures Act, 2015, and the East African Community Customs Management Act. Each year, the Finance Act introduces changes that can significantly affect the tax position of businesses and individuals. Navigating this landscape requires not only a thorough knowledge of the statutes but also an understanding of the administrative practices of the Kenya Revenue Authority (KRA) and the jurisprudence of the Tax Tribunal and the High Court.

Advocates in this area provide advisory, compliance, and dispute resolution services across the full spectrum of Kenyan taxes. On the advisory side, they help businesses structure their operations in a tax-efficient manner — advising on the choice of entity, the location of operations, the use of holding companies and special purpose vehicles, and the utilisation of available incentives and exemptions. Advocates advise on the tax implications of transactions such as mergers and acquisitions, group reorganisations, real estate transactions, and cross-border investments, and they work alongside accountants and tax advisors to implement structures that are both commercially effective and legally robust.

Transfer pricing is a specialised area of this practice area. Advocates advise multinational enterprises on the application of the transfer pricing rules under the Income Tax Act and the OECD guidelines, the preparation of transfer pricing documentation, the conduct of functional analysis, and the defence of transfer pricing positions during KRA audits. Advocates also assist with advance pricing agreements (APAs) and mutual agreement procedures (MAPs) where available.

On the compliance side, they assist clients with the registration for tax obligations (PIN, VAT, PAYE, NSSF, NHF, SDL), the filing of returns, the withholding of tax on payments to residents and non-residents, and the management of tax audits and investigations. Advocates represent clients in KRA audits, objection proceedings, and demands for additional assessment, and they ensure that the procedural rights of the taxpayer — including the right to be heard and the right to reasons — are respected.

Dispute resolution is a core component of their tax practice. Advocates file objections to KRA assessments under section 51 of the Tax Procedures Act, they appeal unfavourable objection decisions to the Tax Tribunal under section 52, and they further appeal to the High Court and the Court of Appeal where necessary. Appeals follow the particular procedural rules of the Tax Tribunal, including the requirement to pay the tax in dispute (or 50% in some cases) before filing an appeal.

Advocates also handle indirect tax matters — VAT registration and compliance, input tax recovery disputes, the treatment of zero-rated and exempt supplies, and the management of VAT refund claims. On the customs side, they advise importers and exporters on tariff classification, valuation, origin, and the management of customs disputes, including demands for additional duty and penalties.