Income Tax Act(cap 470)

: ^KENYA

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Chapter 10

Capital Allowances in Kenya (Second Schedule)

Under s.16(1)(b) ITA, no deduction is allowed for depreciation as presented by acounting principles. However, under s.15((2)b) the following amounts under the Second Schedule (Capital Allowances - investments in buildings and machinery) are allowable as a deduction against income where used for business purposes;

   In recent times two major events have emerged as follows;

• The Second Schedule was deleted by the Tax Laws Amendment Act 2020 (TLA 2020-1) and a new Schedule inserted


• the reducing balance basis of calculating the capital allowance was changed to straight line basis by Finance Act 2021

Find below investment allowances and rate of capital allowances applicable over the years ;

1. Industrial Building Allowance (IBA)

item	note	2009 & Prior	2010	2020 (TLA-1)
Industrial Buildings		2.5	10	12.5
Hostels, Education & Training Buildings		10	50	10
Rental Residential Buildings	(i)	5	25	10
Commercial Buildings		5	25	10



Notes:


1. E.F.D 12th June 2009. From 2020 categorised under commercial buildings.

2. Wear & Tear Allowance(W&T)

item	note	2009 & Prior	2010	2020 (TLA-1)
Heavy self propelled machinery such as tractors, combine harvesters		37.5		12.5
Computer & peripheral, computer hardware, calculators, copiers and duplicating machines		30		25
Other self propelling vehicles and aircrafts	(i)	25		25
All other machinery including ships		12.5		10
Computer software		5	20	25
Indefeasible right to use fibre optic cable		5		10
Telecommunication equipment		12.5	20	10
Concession arrangements		spread	over	period



Notes:


1. Non-commercial vehicles cost restricted to Kshs.2 million w.e.f 1/1/2006 and increased to Kshs.3 million w.e.f. 25/04/2020 ;

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