3 November 2012

Kenya: KRA Explains Tax

Photo: The Star
Kenya's Hellen Obiri competes during the women's 3000m final at the 2012 IAAF World Indoor Athletics Championships at the Atakoy Athletics Arena in Istanbul on March 11, 2012.

Kenya Revenue Authority (KRA) has moved in to quell the stand-off between them and Kenyan international athletes over taxation.

The two parties have been at loggerheads with the athletes accusing the taxman of seeking to charge them double taxation.

Athletics Kenya officials led by their President Isaiah Kiplagat and top athletes have recently accused KRA of ploting to impose doubler tax on their hard earned income. The athletes feel that KRA's move to tax their money from international events amounts to double taxation because they also pay tax to the host countries.

However, in a statement, KRA explained: "It is important to note that the law requires Kenyan residents to pay taxes on their income regardless of it's source or country of origin. Income from participation in sporting activities is no exception. Therefore, taxes on such income should be paid in the required instalments and declared under self assessment."

The tax collector further clarified that they are only interested in taxing any money that does not meet the local tax provisions despite being taxed abroad. As far as the athletes are concerned the KRA explained that they are only interest in 'tax credit' which means the difference in tax percentage between the country of source and Kenya.

"The main complaint aired by a number of athletes regarding taxation of their overseas income is the perceived double taxation. It is claimed that they are expected to pay taxes in countries in which they compete. This may be true depending on the tax laws of those countries. However, such income is still subject to tax in Kenya. In this regard, the law provides for tax credit to the extent that tax has been paid on such income," read the statement.

KRA added that if evidence is produced to the effect that the money has been taxed to percentages equal or above what they demand, then the money will pass the local system untouched, but they will always demand the differences if the income has been touched at lesser percentages in the country of origin.

"If the credit is equal to or more than the Kenyan tax liability, then there will be no further liability. However, where the 'Tax credit is less than the computed Kenyan tax liability, the difference is payable to KRA. Therefore, there is no double taxation of the same income."

However KRA insisted on document proof of the same saying: "The tax credit should be supported with evidence of payment for KRA to allow it as deduction against the computed Kenyan tax liability."

The statement signed by Benson Korongo on behalf of Commissioner of Domestic Taxes (Medium and Small Taxpayers) added that the department is committed to enhancing compliance through informed awareness. "It is against this backdrop that the authority has put in place an elaborate educational programme targeting existing and potential taxpayers. We plan to facilitate awareness forums for athletes starting this month in Eldoret."

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