Category Archives: KRA

Capital Gains Tax in Kenya

It’s a new year, and with it comes the reintroduction of the capital gains tax (CGT) in Kenya. This is not the first time it’s appeared (it was suspended in 1985), but previous attempts to reintroduce it in 2007 and 2011 were set aside by parliament. This time it has stuck and is now the law, with the a 5% tax imposed on the transfer of land, buildings and investment shares.

While guidelines have been published by the Kenya Revenue Authority (KRA) it’s still unclear how the tax is to be determined such as on the buying and selling of shares.

For the last few weeks there’s been a mini-rush to complete the sale of some land and share deals. e.g. Equity Bank’s divestiture from Housing Finance with a sale of 24.9% to British American Investments (Britam) for Kshs 2.7 billion ($30.3 million) was concluded on December 31, 2014 (presumably beating the tax deadline).

With land deals, there may be some double taxation, in that  that while a buyer pays stamp duty of 4% of the sale value, the government will also deduct 5% from the amount paid to the seller for the same piece of land.

CGT will apply when  a property is gifted, abandoned or when the rights to a land title. Exemptions allowed under CGT include transfers that involve retirement benefits, divorce, land that is less than 100 acres, when a company issues shares, motor vehicles, estates of dead people, in corporate restructurings, and if someone sells a house they have lived in for more than 3 years.

Curiously the guidelines have something special for Kenya’s budding extractive industry, but which some investors are not happy about as for sector, which includes, oil, gas, and minerals comes up for some special attention: The net gain on disposal of interest in a person owning immovable property in the mining and petroleum industry is taxable..at 30% for residents and 37.5% for non residents. 

E-Government Moment: Part II

Stuff happening on the e-government sidelines
  • July 1 is the deadline for Matatu’s and other Public Service Vehicles (PSV’s) to switch to cashless payments of accepting fares, in lieu of hard currency. PSV’s are meant to have signed on to services like Google & Equity’s – BebaPay or be in breach of the law.  It’s not expected to be smooth sailing considering the slow uptake of cashless systems among smaller matatus within  Nairobi, and it’s possible that after taxes, the minimum fare will be more than Kshs 30.
  • June 30, (today) is also the deadline for Kenyans to file their tax returns. This had been a largely academic exercise of submitting paper forms that the revenue authority (KRA) was unlikely to ever go through, and had even been discarded. But in rejecting a bill, parliament re-opened this tiresome exercise. This year, KRA has advertised its website, as the only way for Kenyans to file their taxes – but the site and service still has many challenges, including inaccessibility. 

  • While the schools laptop project seems to have stalled at the procurement stage, some $200 million has been allocated in the 2014/15 budget to procure some laptops. More visible in terms of making the government digital, has been the procurement by by county governments and parliament of iPad’s and other devices for leaders to use.
  • In the banking sector, June was a turning point for the migration to debit and credit cards to Chip-and-PIN enabled cards. While the benefits to consumers appear negligible (less fraud identity than swipe cards) and there is a cost of about $1.80 to 3.20, there has now been a liability shift, and going forward, costs associated with fraud involving non-EMV compliant cards will be borne by the issuing bank (currently they are borne by the acquirer/merchant).
  • In terms of digital television, there’s one year left for the analogue to digital migration in Africa. However, most countries are unlikely to make this deadline. Read more.
EDIT
  • The Kenya Government has automated registration of companies by launching a one-day registration of companies system to improve efficiency at the state law office.

Budget 2014/15

Excerpts by @JGMBugua of today’s budget speech that was read in the Kenya Parliament, by the National Treasury Cabinet Secretary, Henry Rotich. 

  • Grumbles still rumbling through Parliament as members realize they have been snookered and the Waiguru motion is dead
  • Kenya Revenue Authority (KRA tax collection) target set at Kshs 1.1 trillion for the coming year i.e. ~$12.5 billion
  • Financial Services Authority to be established… We should be aware the FSA in the UK had to be split and some of its oversight functions returned to the Bank of England after systemic failures during the global financial crisis. The more apparent implication of establishing the Financial Services Authority is that it would likely see the collapse and merging of…the Capital Markets Authority, the Insurance Regulatory Authority, SASRA (for Saccos), the Retirement Benefits Authority and so on..
  • Three new airports to be built in Mandera, Malindi and Suneka (?)
  • Duty rates on import of iron and steel products increased from 0% – 25% – apparently to protect local industries
  • KRA ordered to stop demanding custom bond from importers of refined industrial sugar and wheat…Those barons lobbied hard
  • Import of inputs for seed processing exempted from duty.
  • Govt moves to block multinationals from evading tax through transfer pricing where the local subsidiary buys from its mother company at exaggerated prices hence reporting little or no profits. “To keep the relationship at an arms length…” Rotich
  • Stock market brokers win big as government and the Investor Compensation Fund forced to retreat and accept only 5% shareholding each in the demutualized stock exchange..Brokers to share 90%.

Idea Exchange: Bank, Literature, Journalism, Opportunities, and Win a Free Phone

The Africa AgriBusiness Challenge from Enactus Kenya and Syngenta seeks out youth to generate creative business ideas to improve the agricultural productivity of certain crop value chains. Deadline is June 10.

The 2014 Africa Awards for Entrepreneurship will have five awards to celebrate entrepreneurs at different stages of the entrepreneurial life cycle; lifetime achievement, transformational business, outstanding mature business, outstanding growing business and outstanding social entrepreneur.

The Africa Prize for Engineering Innovation. Details here .. via @calestous.

@AfriCOG Investigative Journalism Fellowship Programme 2014. Deadline is 30 May. 

Anthemis Fellowship seeks out entrepreneurs, executives and thought leaders who are passionate about building an improved financial services industry fit for the digital age. The Anthemis Fellowship program includes 4 months at the Anthemis London office, 4 months with one of their portfolio companies and 4 months with a major financial services firm. It also comes with a monthly stipend of EUR2000 and an invitation to attend the Anthemis #HackingFinance Retreat from July 10-13, 2014 in Meribel, France. Deadline is June 1. 

@APO_Source has had a scholarship for an African journalist to to attend the 2014 annual meetings of the African Development Bank.

Bloomberg Africa ‏@BBGAfrica – seeks Swaziland, Eritrea, Djibouti, G.Bissau, Cape Verde, Eq. Guinea, Sao Tome stringers – Please e-mail asguazzin@bloomberg.net

Citi Africa Management Associate Programme Citi in Africa is  looking for ambitious graduates with strong academic backgrounds, maximum of two years’ work experience, leadership, teamwork, and excellent communication skills.

The 2014 CNN/MultiChoice African Journalist Awards will recognise excellence in culture, economics & business (NEW), energy & infrastructure (NEW), environment, health & medical, news impact (NEW), photography, press freedom, sports, language general news, Francophone news and also Portuguese news. Details here and the deadline is 30 May.

EABL Foundation scholarships for needy students who have gained admission to Kenya public universities. Deadline is June 6. 

Etisalat Prize 2014 for African literature is now open with a top prize of £15,000 and a fellowship at the University of East Anglia, while winner and shortlisted writers also receive a sponsored two city tour promoting their books. Details here and the deadline is 8 August.

The Golden Baobab Prizes for Literature include awards for a picture Book (targeting readers aged 6 – 8 years), early chapter (targeting readers aged 9 -11) and rising writers (for a young African author under the age of 18 who demonstrates the talent and drive to become the next great African author for children). Details here and the deadline is June 29.

Jalada / @KwaniTrust seek 3 best Afrofuture submissions for a second anthology. Deadline is D/L 15

Japan Government scholarships  in research, teacher training, technology, and specialized training .. via @njathika

Want to be a Jameson brand ambassador? Here’s how to apply (via @uqweli ) oops – deadline also passed.

KCB: The region’s largest bank has ongoing internships, management trainee and management exchange programs. Sourced from @RookieKE blog.
 
Kenya Revenue Authority –  KRA graduate trainee program 2014

The Kenya StartUp Cup is open to all Kenyan youth entrepreneurs who can apply to win Kshs 1 million (~$11,500). Details from the @prepaid_africa blog and the deadline is May 20.

KenyaTop100 seeks successful companies with turnover of Kshs 70 million to Kshs 1 billion (~$12,000)  with 3 years audited accounts to compete and be among @kenyastop100 

Kijabe Forest Trust @KijabeForest  is seeking a new logo design.

Kuona Trust has internship opportunities for students at their offices in Hurlingham, Nairobi. 


The Kwani Trust 2014 fiction workshop seeks to develop new contemporary fiction writers between the ages of 18 and 24 and from outside of Nairobi. To apply, check the website, and send email to submissions_at_kwani.org by May 26.

Orange  has launched the 4th edition of the Orange African Social Venture Prize which will award prizes to four projects; three with grants of 10,000 EUR, 15,000 EUR and 25,000 EUR, and a new special prize of 10,000 EUR. It’s open to all entrepreneurs or legal entities that has been in existence for fewer than three years at the time of the competition and the deadline is 19 September.

Power Africa Off Grid Energy Challenge from @USADF and @GeneralElectric Africa offers up to $100,000 to 100% African owned and African managed firms that seek to power up under-served parts of rural Kenya. Deadline is June 20.  

School of Data: Become a School of Data Fellow as they are currently broadening their efforts to spread data skills around the world, and are seeking people who are data savvy, understand the role of NGO’s, are interested or experienced in working with journalism and/or civil society, or enjoy community-building.  Deadline is 1 June.


Standard Chartered Bank Fast Track Program: The bank is looking for young graduates to join their management trainee program in several African countries, including Kenya, Ghana, Nigeria, Tanzania, Zimbabwe, Uganda, and several international locations. Sourced from @RookieKE blog

 
The Stanford University Africa MBA Fellowship Program pays for tuition and associated fees (approximately US $145,000) for citizens of African countries with financial need who wish to obtain an MBA at Stanford GSB. Stanford will award up to eight Stanford Africa MBA Fellowships annually. Details here and the deadline is 13 June.


Strathmore University @StrathU scholarships from @imbankke for 10 needy students pursuing various Finance related degree programmes.

Swedish Institute Management Programme‏ The Swedish Institute is launching a new leadership programme for progressive leaders from Kenya,Tanzania, Rwanda, Ethiopia and Zambia – offering a combination of theory and practice in the area of responsible leadership and sustainable business.  Details here and the deadline is June 6.

Total Kenya Graduate Management Trainee Program. The company was is looking for young dynamic graduates.  Also sourced from @RookieKE blog but the deadline was 7 May  
The Wall Street Journal @WSJ looking for entrepreneurial reporter to cover the most entrepreneurial of Africa beats–business, from Nairobi. Apply to @pwonacott

Submit your wikimedia proposals to be included at Wiki Indaba 2014 in Johannesburg. Details here and the deadline is 15 May.
The World Bank Young Professionals Program 2014 seeks highly qualified and motivated individuals skilled in areas relevant to the World Bank’s operations such as, economics, finance, education, public health, social sciences, engineering, urban planning, and natural resource management. Details here and the deadline is 30 June.
 
Win a Nokia Lumia 1320: There are very few comments on the blog here despite the number of daily readers, and many of the comments are from spammers promoting products from far off countries. To stimulate comments, I’m giving away a brand new Nokia Lumia 1320 phone (worth about $400/Kshs 35,000) to the person who engages the most on the site. The phone was an excellent, but unexpected, prize awarded to the winner of the best business blog at the recent 2014 Kenya Blog Awards ceremony. During the month of May, readers to the blog and it’s archives, can make as many comments as they want, and I’ll respond on some. 
Rules 
1. There are no rules about winning.
2. It’s about serious comments, not volume – and blog comments only, not tweets/tags
3. This is personal, and the promo has nothing to do with Nokia  or Nokia East Africa.
4. @Coldtusker is excluded 🙁
5.
An announcement will be made on June 14, and there may not be a winner  if no one is deemed to be worthy.

NSSF and SME’s Part II

This weekend, the National Social Security Fund ran an advertisement in the newspapers clarifying amounts that employers and employees will pay now that  changes to the NSSF act are legal.
Earlier media, and social media, reports had NSSF taking as much as 12% of an employees earnings. But the NSSF ad introduced the phrase pensionable salary on which the deduction is based – so it’s a percent of Kshs. 18,000 (pensionable salary) and so if someone earns Kshs. 100,000 ($1,175 per month) and their employer has no current pension scheme, their deductions are: 

Tier 1
Kshs 360 from employer
Kshs 360 from employee

Tier 2
Kshs 720 from employer 
Kshs 720 from employee

So total payment for that employee, that an employer will remit to the NSSF is Kshs 2,160 – and not Kshs 12,000. This still amounts to a payment that is five times what a typical company was making to the NSSF last year (Kshs 400 per month, per employee)  

From a note at Alexander Forbes Financial Services: The effective date (of the NSSF Act) was 10 January 2014, literally giving employers no time to apply for the opt out. They thus will have to remit both Tier 1 and Tier 2 contributions to NSSF until the opt out is granted…also that these amounts  will increase each year for the next 5 years.

EDIT – Jan 21: The Government has deferred the commencement of the new NSSF Act to the end of May 2014. This means that the contributions to the fund will be made at the old rate.  Read more.