Western Heights, 2nd Floor, Karuna Road, Westlands
Mon-Sat, 8.00-18.00. Sunday CLOSED
Where a tax payer fails to agree with the KRA on the tax treatment of a particular matter, or where the Dispute Resolution Mechanisms set out within our tax laws have either been exhausted or will not be sufficient to address a party’s concerns, it is usually necessary to look to the Courts for dispensation. Accordingly, our work under Tax Litigation Services would involve:
• Advising on the best course of action to take when faced with a dispute;
• Representation of clients in the Courts on any contentious matter to do with the tax treatment of their transactions;
• Interpretation of the various provisions of the relevant tax laws; and
• Obtaining Court orders where there have been administrative excesses by any of the Government organs (such as injunctive reliefs among others);
Alongside the provision of regular legal services to our clients, we always ensure that such clients derive maximum value from us by also advising on the tax aspects of their transactions. Our tax advisory practice combines seven dedicated core services areas – Income Tax (Corporate Tax, personal tax and withholding tax), International Tax, Value Added Tax, Global Employment Services, and Transaction Advisory, to offer a broad range of advisory and planning services to clients both in Kenya and beyond.
To this end, some of the elements of business that we constantly advise on include:
• Business set up from a tax perspective i.e. branch/subsidiary considerations among other forms;
• Company/Group re-structuring;
• The tax implications of all types of transaction agreements;
• Mergers and acquisitions;
• Holding company locations;
• Repatriation of funds from Kenya and the tax impact;
• Inter-company transactions/international trade;
• Financing options and their tax considerations; and
• Any other transaction not specified above that your business may undertake.
You will find that as you continue with your operations in Kenya, you will need to consult on different tax matters on a regular basis. In this regard, our services with be provided with respect to small advisory queries that do not require substantial input from our end touching on taxes such as corporation tax, withholding taxes, VAT and personal taxes. Such advice would be provided in the form of emails, telephone calls, brief reports and short meetings with your personnel.
As it is difficult to estimate how much time or how many queries you may have in any given period, we typically propose retainer fee arrangements catering for time costs incurred in dealing with the various/ad hoc queries as raised by you during the year.
As a trading entity in Kenya, you will be required to comply with Kenyan tax laws and regulations. In this regard, we can provide you with annual tax compliance services as follows:
• Review of the draft and final accounts in order to determine the taxable sources of income and highlight any tax exposure areas that arise;
• Preparation of the annual income tax computation;
• Clearing matters arising from our review points with yourselves;
• Completion and submission of self-assessment return together with the financial statements to you for signature and subsequently to the Kenya Revenue Authority (KRA);
• Computation of instalment taxes and balance of tax payable, and advising on when they are due and assist in making payments to the KRA upon receipt of the same from you; and
• Dealing with any clarifications or routine matters relating to the tax computation. Any audits, investigations and assessments by the KRA shall be outside the scope of our compliance services, but shall be dealt with under the below separate scope.
Kenya operates a self-assessment system of taxation. This means that tax payers are required to compute their own taxes and report the same to the Kenya Revenue Authority (KRA). However, the KRA has the power to conduct audits of the information submitted by a tax payer, as well as to look into the books of such tax payer to determine whether its affairs are in accordance with taxation law. The objective of this part of our services would therefore be to evaluate the findings of the KRA in the course of, and after the conclusion of any audit that they may conduct of your affairs. KRA audits can be time consuming and costly for many taxpayers, especially if the process is not well managed. Our scope of work in this regard will usually involve:
• Holding a kick off meeting with you and the KRA to agree on a work plan and a time schedule for the performance of the audit;
• Sitting in, upon your request, as the KRA conducts the audit so that we are able to provide on the spot responses to any issues they may raise in the field;
• A review of correspondences exchanged with the KRA;
• A review of statutory records submitted to the KRA;
• Providing our analysis of the issues raised by the KRA and whether there is a basis to fight the claims made by the KRA;
• Meetings and interviews with the officials of your organisation; and
• Meetings with the KRA to resolve the issues raised;
While there is no guarantee that the issues raised by the KRA will all be resolved amicably, our experience in assisting numerous clients, both local and multinational, has shown that a considerable number of issues get dropped at the audit stage depending on how one manages the entire KRA process. Proper planning and frequent follow up work is usually required, and we will endeavour to resolve issues raised as much as is practical.
The KRA has over time increased its level of scrutiny on business transactions and company operations, with the intention of curbing revenue leakage. This is evidenced by the enhanced level of audits conducted on tax payers. Indeed, many businesses are required to first obtain a Tax Compliance Certificate from the KRA before engaging in certain activities. Failure to obtain the same usually results in delays in commencing core projects of the business, which can therefore cause a significant inconvenience. We therefore believe that you will want to ensure that your business practices are in line with tax legislation and that at a moment’s notice you can obtain a clean bill of health from the KRA, as any instance of non-compliance attracts punitive penalties, significant back taxes and loss of tax relief in some cases.
Tax law is one of the most dynamic laws in the country as it constantly undergoes changes each year, and it is for this reason that we provide tax health-check services to our clients. A health-check exercise would cover all the taxes likely to affect your business, and would capture transactions or activities that have taken place over a certain defined period.
A tax health-check exercise is invaluable to your business as it serves the purpose of:
• Providing you with the tax profile of your business i.e. what is your level of risk?
• Identifying tax inefficient areas of the organization’s operations to comment on how greater tax efficiency can be achieved;
• Identifying areas of the organization’s operations for which tax advantages are not being utilised;
• Assisting you mitigate against any exposures identified in a timely way; and
• Assisting you in planning your future activities based on the recommendations that we would typically provide after such an exercise.
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