Press Room

February 25, 2019

From Kenya: Tax on Distribution of Dividends from Untaxed Profits

Source: Philip Muema, Noreen Wanyoike, or Brian Kangetta, Andersen Tax in Kenya, a member firm of Andersen Global

The Finance Act 2018 brought an amendment to the Income Tax Act which introduced a tax on distribution of dividends from untaxed profits at resident corporate rate (30%). This took effect on January 1, 2019. However, this amendment has brought a lot of confusion in its interpretation on what untaxed incomes relates to.

To settle this confusion, Kenya Revenue Authority (KRA) has issued a public notice to clarify on the matter.

In the public notice, KRA stated that the tax does not apply to distribution of income as dividends where the income is:

  • Received by a registered collective investment scheme;
  • Dividend received by a resident company from a subsidiary, whether local or foreign;
  • Previously subjected to capital gain tax provisions;
  • Previously subjected to final tax.
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