Ask a lawyer:
Tell me what taxes a consultant should pay

Table of Contents

1. Introduction

2. Taxes Payable by Consultants in Kenya 2.1 Income Tax 2.2 Value Added Tax (VAT) 2.3 Withholding Tax 2.4 Other Taxes

3. Conclusion

Introduction

This response will provide information on the taxes payable by consultants in Kenya. The information will be based on the Kenyan tax laws, specifically the Income Tax Act, the Value Added Tax Act, and the Tax Procedures Act.

Taxes Payable by Consultants in Kenya

Consultants in Kenya are subject to various taxes, including income tax, value-added tax (VAT), withholding tax, and other taxes.

2.1 Income Tax

Consultants are considered self-employed individuals and are required to pay income tax on their earnings. The Income Tax Act, 2013, outlines the tax rates and regulations for income tax.

• Tax Rates: The income tax rates for individuals are progressive, meaning that the higher the income, the higher the tax rate. The current tax rates are as follows:

  • First KES 1,488,000: 10%

  • Next KES 1,488,000: 15%

  • Next KES 1,488,000: 20%

  • Next KES 1,488,000: 25%

  • Income above KES 5,952,000: 30%

• Tax Filing: Consultants are required to file their income tax returns annually with the Kenya Revenue Authority (KRA). The deadline for filing income tax returns is usually in June of the following year.

• Tax Deductions: Consultants can claim certain deductions from their taxable income, such as expenses incurred in the course of their business, contributions to retirement funds, and medical expenses.

2.2 Value Added Tax (VAT)

Consultants who provide services that are subject to VAT are required to register for VAT and charge VAT on their services. The Value Added Tax Act, 2013, outlines the VAT regulations.

• VAT Registration: Consultants are required to register for VAT if their annual turnover exceeds KES 5,000,000.

• VAT Rate: The standard VAT rate in Kenya is 16%.

• VAT Filing: Registered VAT consultants are required to file VAT returns monthly or quarterly, depending on their turnover.

2.3 Withholding Tax

Consultants may be subject to withholding tax on their income, depending on the nature of their services and the client they are working for. The Tax Procedures Act, 2015, outlines the withholding tax regulations.

• Withholding Tax Rates: The withholding tax rates vary depending on the type of income. For example, withholding tax on consultancy fees may be 5% or 10%.

• Withholding Tax Obligations: Clients are required to withhold tax from payments made to consultants and remit the withheld tax to the KRA.

2.4 Other Taxes

In addition to income tax, VAT, and withholding tax, consultants may be subject to other taxes, such as:

• Property Tax: If a consultant owns property in Kenya, they may be required to pay property tax.

• Stamp Duty: Consultants may be required to pay stamp duty on certain documents, such as contracts and agreements.

• Turnover Tax: Consultants with a turnover of less than KES 5,000,000 may be subject to turnover tax.

Conclusion

Consultants in Kenya are subject to various taxes, including income tax, VAT, withholding tax, and other taxes. It is important for consultants to understand their tax obligations and comply with the relevant tax laws to avoid penalties. Consulting with a tax advisor can help consultants navigate the complex tax system and ensure they are meeting their tax obligations.

Answered by mwakili.com

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