Income Tax Act(cap 470)

: ^KENYA

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Chapter 12

Payment of Tax through Instalments (s.12)

• To manage cashflows of taxpayers, liability to income taxes is settled through instalment payments. Hence the accronom 'Instalment Taxes'.


• Instalment taxes became effective from 1st January 1990.

Computation of Instalment Taxes (s.12(2)&(3)

The amount of instalment tax due is based on the lower of;

• the tax payable in respect of the current year and


• 110% of the tax assessed or estimated as assessable in respect of the preceding year of income.

The amount determined above may be reduced by the following credits;

1. Advance Tax paid with respect to commercial vehicles
2. Paye withheld from employment income
3. Withholding tax credits

1. Instalment Tax Rates

Tax is due on a quarterly basis on the following months and proportions:



item	month	proportion
First Instalment.	4th	25%
Second Instalment.	6th	25%
Third Instalment.	9th	25%
Fourth Instalment.	12th	25%





2. Instalment Tax Agricultural Enterprises

Tax is due on a bi-annual basis on the following months and proportions:



item	month	proportion
First Instalment.	9th	75%
Second Instalment.	12th	25%

Notes:

• Final tax due by the end of the 4th month after the accounting period

Exemption From Instalment Taxes (s.12(1)&(5)

Taxpayers who meet the following criteria are not required to account for instalment taxes lower of;

• where their taxable income is employment income only.(s.12(1)(a))


• where the total tax payable for that year does not exceed Kshs.40,000/- of income.(s.12(5))

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