Residential Rental Income Tax:
Section 6A,
The Act has increased the upper limit of residential income which is subject to residential rental income tax from the current limit of 10 million to 15 million Kenya Shillings. The rate of tax in respect of residential rental income is ten percent of the gross rental receipts of a taxable resident person. This section comes in operation on 1st of January, 2021. The minimum income has been raised from the previous ksh. 144,000/- – Ksh. 288,000/-
Imposition of new tax, minimum tax
Section 12(D)
The Act has introduced a new type of tax to be known as minimum tax. The tax will be charged at the rate of 1% of gross turnover of a person. This means that any person, except those listed below, will be required to compute instalment tax and the minimum tax. If the latter is higher than the first, tax will become due and payable or vice versa.
Minimum Tax will be payable in instalments on the fourth, sixth, ninth and twelfth month of the year of income. The tax is due on the twentieth day of each period named above. The tax payer should note that minimum tax will not apply to;
* Exempt income- first Schedule
* Residential rental income – section 6A
* Income chargeable to turnover tax- section 12C
* Capital Gains tax- Eighth schedule
* Taxation of extractive industries- ninth schedule
* Employment income- section 5
NB: This section comes in operation on 1st of January, 2021.
Computation of installment tax
Section 12(1) provides that a person receiving employment income or emoluments will be required to pay minimum tax if its higher than installment tax payable.