Policy Note · Where your company is really taxed
A company is resident where its real management and control sit, whatever its certificate of incorporation says.
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Kenyan law treats a company as resident, and so taxable in Kenya, where its management and control are exercised, not where it is registered. A company incorporated abroad whose strategic decisions are made by directors sitting in Nairobi is managed and controlled in Kenya, and substance prevails over the form of the structure.
The gain on selling such a company's assets is taxable in Kenya, and where the non-resident has nothing here to collect from, the authority may appoint a resident who controls its affairs as its tax representative. The authority has read these structures, and it decides residence on where the decisions are taken.
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Precursor is published by the FinTech Association of Kenya and exercises independent editorial judgement under the Editorial Independence Charter. This article is labelled Precursor Executive Classroom, which marks commercial material. Knowledge on Tax and financial judgement.
Lecture 126 · A director kept meeting the taxman instead of appealing, and four years on the bill had only grown.
𝑻𝒉𝒆 𝑪𝒂𝒔𝒆 𝑹𝒐𝒐𝒎: KRA confirmed a KSh 899,328 income-tax bill against Saphira, and its director spent four years in meetings and relied on his compliance certificates instead of appealing. The tribunal held meetings do not stop the thirty-day clock, a certificate is not proof of payment, and refused leave to appeal out of time; the debt had grown to KSh 1.4 million.
Tax and financial judgement · 4 min read · Paid
Lecture 125 · A rice importer called cleaning and repacking manufacturing, and the court said packaging is not making.
𝑻𝒉𝒆 𝑪𝒂𝒔𝒆 𝑹𝒐𝒐𝒎: Mjengo claimed an investment deduction on KSh 1.5 million of machinery that cleaned and repackaged imported rice, calling it manufacturing. Through three forums the ruling held that packaging alone is not making goods, the rice remained rice, and a definition framed with 'means' is exhaustive. The deduction was refused.
Tax and financial judgement · 4 min read · Paid
Lecture 124 · A contractor said the money was his clients', had no agreements to show it, and the assessment stood.
𝑻𝒉𝒆 𝑪𝒂𝒔𝒆 𝑹𝒐𝒐𝒎: KRA billed MU-BEI KSh 1.7 million after its eTIMS invoices far exceeded its declared sales. The company said the money was clients' funds for materials, passed on as an agent, but had no written agency agreements and no reconciliation. The tribunal held VAT fell due on the invoices and dismissed the appeal.
Tax and financial judgement · 4 min read · Paid