Corporation tax is an income tax levied on corporate bodies like limited companies and trusts in Kenya at rates of 30% for resident companies and 37.5% for non-resident companies. The tax is paid in advance in 4 installments throughout the year based on the previous year's tax due. The balance is due by the 4th month after the accounting period ends. Various tax incentives aim to promote investment and exports, including capital allowances, investment deductions up to 100% of costs, and tax holidays for companies in export processing zones and special economic zones.

1. CORPORATION TAX

2. Introduction
This is a form of income tax that is levied on corporate bodies such as limited companies and trusts.
It is levied on both resident and Non resident companies.

3. Introduction Contd’
Companies that are based outside Kenya but operate in Kenya or have a branch in Kenya pay corporation tax on
income accrued within Kenya only.

4. Corporation Tax Rate
Resident companies are taxed at the rate of 30%
Non-Resident companies are taxed at the rate of 37.5%

5. Corporation Tax Rate Contd’
The tax is paid in advance at four equal installments. It is paid before the year of income is over and before the
accounts of the business are prepared to establish the actual tax payable.

6. Corporation Tax Rate Contd’
The installments are spread evenly @ 25% of the tax due and payable on or before the 20th day of the 4th, 6th, 9th and
12th months of the year except those in the Agricultural sector whose installments are paid @ 75% in the 9th month
and 25% in the 12th month.

7. Corporation Tax Rate Contd’
Balance of tax on self assessment is payable on or before the last day of the fourth month following the end of the
accounting period.

8. Filing Corporation Tax
The income Tax Company return should be filed on or before the sixth month after the end of the accounting period.

9. Tax Incentives
1. Capital allowances
They include wear and tear allowances, industrial building deduction, investment deduction and farm-works
deductions.

10. Tax Incentives Contd’
2. Investment deduction
An investor who incurs capital expenditure on building and/or machinery used for manufacture is entitled to an
investment deduction equal to 100% of the cost

11. Tax Incentives Contd’
3. Industrial Building Deduction
This is an allowance granted to an investor who incurs capital expenditure on a building used as an industrial
building at the rate of 10% of the cost (net of investment deduction, if any)

12. Tax Incentives Contd’
4. Public expenditures
Expenditures of a capital nature incurred in that year of income (with the prior approval by the Minister) by the
person on the construction of a public school, hospital, road or any similar infrastructure will be an allowable
deduction.

13. Tax Incentives Contd’
5. Export Processing Zones Incentives
 A 10-year corporate income tax holiday is available to certain designated enterprises that undertake activities
consisting of the manufacture of goods for exports only (under the Export Processing Zones) and a 25% tax rate for a
further 10 years
 10 year withholding tax holiday on dividends and other remittances to non-resident parties (except for EPZ
commercial license enterprises)
 100% investment deduction on new investment in EPZ buildings and machinery.

14. Tax Incentives Contd’
6. Special Economic Zones
Capital expenditure on buildings and machinery for use in a Special Economic Zone shall be entitled to Investment
deduction equal to one hundred percent of the capital expenditure.

15. Tax Incentives Contd’
7. Incentives for Newly Listed Companies
For newly listed companies, there are preferential corporate tax rates dependent on the percentage of listed shares
as follows-
 20% rate if 40% of issued share capital is listed (for 5 year period).
 25% rate if 30% of issued share capital is listed (for 5 year period).
 27% rate if 20% of issued share capital is listed (for 3 year period).