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THE FINANCE ACT 2018,No 10 of 2018,Date of Assent 21st September 2018. Date of Commencement See Section 1,AN ACT of Parliament to amend the law relating to. various taxes and duties and for matters incidental. ENACTED by the Parliament of Kenya as follows,PART I PRELIMINARY. 1 This Act may be cited as the Finance Act 2018 Shorttitleand. commencement, and shall come into operation or be deemed to have come. into operation as follows,sections 48 49 50 54 56 58 60 61 62 63 64.
65 66 67 68 and 78 on the 1st October 2018,sections 4 6 7 11 a and 11 c on the 1st. January 2019,all other sections on the 1st July 2018. PART Il INCOME TAX, 2 Section 2 of the Income Tax Act is amended Amendment of. section 2 of Cap, by inserting the following new definition in proper 470. alphabetical sequence,demurrage charges means the penalty paid for.
exceeding the period allowed for taking delivery of goods. or returning of any equipment used for transportation of. by deleting the definition of the word winnings,and substituting therefor the following. definition,winnings includes winnings of any kind and a. reference to the amount or the payment of winnings shall. be construed accordingly, 3 Section 7 of the Income Tax Act is amended by Amendment of. section 7 of Cap, deleting subsection 1 and substituting therefor the 470. following new subsection,Finance 2018,1 For the purpose of section 3 2 b.
a dividend paid by a resident company shall be,deemed to be income of the year of income in. which it was payable,an amount shall be deemed to be a dividend. distributed by a company to a shareholder where,any cash or asset is distributed or transferred. by that company to or for the benefit of that,shareholder or any person related to that. shareholder,the shareholder or any person related to that.
shareholder is discharged from any,obligation measurable in money which is. owed to that company by that shareholder or,related person. the amount is used by that company in any,other manner for the benefit of the. shareholder or any person related to that,shareholder. any debt owed by the shareholder or any,person related to that shareholder to any third.
party is paid or settled by that company,the amount represents additional taxable. income or reduced assessed loss of that,company by virtue of any transaction with. the shareholder or related person to such,shareholder resulting from an adjustment. Amendment of, 4 The Income Tax Act is amended by repealing ctiOA of. section 7A and replacing it with the following new Cap 470. Dividend distributed Out 7A Where a dividend is distributed. of untaxed gains or, profits out of gains or profits on which no tax is.
paid the company distributing the,dividend shall be charged to tax in the. year of income in which the dividends are,distributed at the resident corporate rate of. tax on the gains or profits from which,such dividends are distributed. Provided that this section shall not,apply to registered collective investment. 2018 Finance No 10, 5 Section 10 of the Income Tax Act is amended in Amendment of.
section 10 of Cap, subsection 1 by adding the following new paragraphs 470. immediately after paragraph h,demurrage charges and. an insurance premium, 6 The Income Tax Act is amended by repealing Amendment of. section 12C of, section 12C and replacing it with following new section Cap 470. Presumptive tax,12C 1 Notwithstanding any other,provision of this Act a tax to be known as.
presumptive tax shall be payable by a,resident person whose turnover from. business does not exceed five million,shillings during a year of income. The presumptive tax shall apply to,persons who are issued or liable to be issued. with a business permit or trade license by a,county government in a year of income. A person liable to pay tax under,subsection 1 may by notice in writing.
addressed to the Commissioner elect not to,be subject to the provisions of this section in. which case the other provisions of this Act,shall apply to such person. The due date for payment of tax,under subsection 1 shall be at the time of. payment for the business permit or trade,license or renewal of the same. Notwithstanding subsection 1,presumptive tax shall not apply to income.
derived from,management and professional,services or. rental business or,incorporated companies, 7 Section 15 of the Income Tax Act is amended in Amendment of. Section 15 of Cap, subsection 2 by inserting the following new paragraph 470. immediately after paragraph aa,ab thirty percent of electricity cost incurred by. manufacturers in addition to the normal,Finance 2018.
electricity expense subject to conditions set by,the Ministry of Energy. 8 Section 19 of the Income Tax Act is amended by, inserting the following new subsection immediately after. subsection 6A,613 For the avoidance of doubt the gains arising. from the transfer of property by an insurance company. other than property connected to life insurance,business shall be taxed in accordance with the. provisions of the Eighth Schedule,Amendment of, 9 Section 34 of the Income Tax Act is amended in section 34 of Cap.
subsection 2 by inserting the following paragraphs 470. immediately after paragraph m,demurrage charges or. an insurance premium except insurance,premium paid for insurance of aircraft. Amendment of, 10 Section 35 of the Income Tax Act is amended by section 35 of Cap. a in subsection 1 by inserting the following,paragraph immediately after paragraph 1. demurrage charges,an insurance premium except insurance.
premium paid for insurance of aircraft,b inserting the following new subsection. immediately after subsection 5,5A The Commissioner shall pay the tax. deducted from winnings under subsection 1,i and 3 h into the Sports Arts and Social. Development Fund established under section,24 of the Public Finance Management Act. Amendment of, 11 The Third Schedule to the Income Tax Act is the Third.
amended Schedule to Cap,a in paragraph 2 by adding the following new. subparagraph immediately after subparagraph j,k in the case of a company engaged in. business under a special operating framework,arrangement with the Government the rate of tax. shall be to the extent provided in the arrangement. 2018 Finance No 10,b in paragraph 3 by inserting the following new. subparagraphs immediately after subparagraph,demurrage charges paid to ship operators.
twenty per cent of the gross amount payable,an insurance premium five per cent of the. gross amount payable and, c by deleting paragraph 9 and substituting therefor. the following new paragraph,9 The rate of presumptive tax shall be an. amount equal to fifteen percent of the amount,payable for a business permit or trade licence. issued by a County Government,Provided that the tax charged shall be final.
PART III VALUE ADDED TAX,Amendment of, 12 Section 2 of the Value Added Tax Act 2013 is section 2 of No. amended by deleting the definition of the expression 35 of 2013. electronic notice system,Amendment of, 13 Section 5 of the Value Added Tax Act 2013 is Section 5 of No 35. amended in subsection 2 by inserting the following new of 2018. paragraph immediately after paragraph a, aa in the case of goods listed in section B of Part I of. the First Schedule eight percent of the taxable,value effective from the date of assent. Provided that,the taxable value in respect of these goods.
shall exclude excise duty fees and other,charges and. despite section 1 of the Finance Act 2018,this paragraph comes into effect upon. enactment of the Supplementary,Appropriation No 2 Act 2018. Amendment of, 14 Section 13 of the Value Added Tax Act 2013 is section 13 of No. amended by deleting subsection 2 35 of 2013,Amendment of.
15 Section 16 of the Value Added Tax Act 2013 is section 16 of No. amended by deleting subsection 6 and substituting 35of2013. therefor the following new subsection,No 10 Finance 2018. 6 A credit or debit note issued under this section. shall be in the prescribed form,Repeal of section, 16 The Value Added Tax Act 2013 is amended by 40 ofNo 35 of. repealing section 40 2013,Repeal of section, 17 The Value Added Tax Act 2013 is amended by 41 of No 35 of. repealing section 41 2013,Amendment of, 18 Section 44 of the Value Added Tax Act 2013 is section 44 of No. amended by deleting subsections 2 3 4 and 5 35 of 2013. Amendment of, 19 The First Schedule to the Value Added Tax Act First Schedule to.
2013 is amended No 35 of2013,a in section A of Part I. by deleting the expressions 1001 and and,1003 appearing in paragraph 25. by inserting the words used for the,manufacture of goods at the end of. paragraph 27,by deleting paragraph 28,by inserting the tariff Nos 1213 00 00. 12 14 10 00 and 2303 20 00 in paragraph 43 in,proper sequence.
by deleting paragraph 45 and substituting,therefor the following new paragraph. 45 Specialized equipment for the,development and generation of solar and. wind energy including deep cycle batteries,which use or store solar power. by deleting the words primary school laptop,tablets appearing in paragraph 53 and. substituting therefor the word computer,by deleting paragraph 63 and substituting.
therefor the following new paragraph,63 Taxable goods for the direct and. exclusive use in the construction and,equipping of specialized hospitals with a. minimum bed capacity of fifiy approved by,the Cabinet Secretary upon recommendation. by the Cabinet Secretary responsible for,2018 Finance No 10. health who may issue guidelines for,determining eligibility for the exemption.
by deleting paragraph 64,by deleting paragraph 92,in paragraph 93 by inserting the words and. equipment immediately after the word,by deleting paragraph 98. by adding the following new paragraphs,Alcoholic or non alcoholic. beverages supplied to the Kenya Defence,Forces Canteen Organization. Goods imported or purchased locally,for direct and exclusive use in the.
implementation of projects under a special,operating framework arrangements with the. Government,Hearing aids excluding parts and,accessories of tariff No 9021 40 00. One personal motor vehicle,excluding buses and minibuses of seating. capacity of more than eight seats imported by,a public officer returning from a posting in a. Kenyan mission abroad and another motor,vehicle by his spouse and which is not.
exempted from Value Added Tax under the,First Schedule. Provided that the exemption under this item,shall not apply. unless the officer is returning to Kenya,from a posting in a Kenyan mission. abroad upon recall,unless in the case of an officer s spouse. the spouse accompanied the officer in the,foreign mission and is returning with the.
if the officer or the spouse has either,enjoyed a similar privilege within the. previous four years from the date of,importation or has imported a motor. No 10 Finance 2018,vehicle free of duty under item 6 of Part. A of this Schedule,unless the vehicle is imported within. ninety days of the date of arrival of the,officer or spouse or such longer period.
not exceeding three hundred and sixty,days from such arrival as the. Commissioner may allow and,to a State officer,b in Part II. i by deleting item n of paragraph 1 and,i by adding the following new paragraphs. Postal services provided through the,supply of postage stamps including rental of. post boxes or mail bags and any subsidiary,serv ices thereto.
Asset transfers and other transactions,related to the transfer of assets into real. estates investment trusts and asset backed,securities. Services imported or purchased,locally for direct and exclusive use in the. implementation of projects under special,operating framework arrangements with the. Government, 20 The Second Schedule to the Value Added Tax Amendment.
Act 2013 is amended in Schedule to, Part A by inserting the following new paragraph 2013. immediately after paragraph 1 3A,13B The supply of maize corn flour. cassava flour wheat or meslin flour and maize,flour containing cassava flour by more than ten. percent in weight,Part C by deleting tariff No 3004 40 00 and the. corresponding description and inserting the,Tarjff No Description.
3004 41 00 Containing ephedrine or its salts,2018 Finance No 10. 3004 42 00 Containing pseudoephedrine iNN or its,3004 43 00 Containing norephedrine or its salts. 3004 49 00 Other,PART IV TAX APPEALS TRIBUNAL, 21 Section 10 of the Tax Appeals Tribunal Act 2013 Amendment of. Section 10 of No, is amended in subsection 3 by deleting the words the 40 of 2013. proceedings shall be adjourned and, 22 Section 13 of the Tax Appeals Tribunal Act 2013 Amendment of.
section 13 No 40, is amended by inserting a new subsection as follows of 2013. 8 The parties to an appeal may apply in writing, to the Tribunal to settle the dispute out of the Tribunal. and in such a case the time taken to resolve or, conclude the settlement out of the Tribunal shall be. Kenya Gazette Supplement No 121 Acts No 10 REPUBLIC OF KENYA KENYA GAZETTE SUPPLEMENT ACTS 2018 NAIROBI 21st September 2018 CONTENT Act PAGE The Finance Act 2018 165 F Mt Ct3tL FOR 03 OCT 2018 r ft cx NAIROBI KENYA TEL 2 9231 FAX 27126Q4 PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER NAIROBI 165 THE FINANCE ACT 2018 No 10 of 2018 Date of Assent 21st September 2018

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