Income Tax

KRA Publishes Draft APA Regulations: A Framework Taking Shape

On 3 November 2025, the Kenya Revenue Authority published the Draft Income Tax (Advance Pricing Agreement) Regulations 2025, inviting comment from taxpayers and professionals before finalisation. The draft regulations set out a structured administrative process for the APA framework introduced under Section 18G of the Income Tax Act by the Finance Act 2025, which took […]
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Understanding Kenya’s SEP Tax: The End of the Digital Safe Harbour

Kenya has moved decisively to tax the digital economy, and the net is now wider than most non-resident businesses appreciate. Following amendments introduced by the Finance Act 2025, the Significant Economic Presence tax under Section 12E of the Income Tax Act applies to all income earned by non-residents from services delivered over the internet or […]
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High Court Ruling on Missing Traders & Burden of Proof

Commissioner of Domestic Taxes v Dinesh Construction Limited (2025) KEHC 17058 (KLR) Background In 2021, KRA audited Dinesh Construction Limited for the years 2016–2021 and flagged risks in corporation tax, VAT, PAYE and Withholding Tax. KRA issued a confirmed assessment claiming: Missing Traders:  Dinesh claimed VAT inputs from suppliers who were “missing traders” entities that […]
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When Does the Burden of Proof Shift From Taxpayer to KRA?

When Does the Burden of Proof Shift From Taxpayer to KRA?

Commissioner of Investigations and Enforcement v Traneshvi Limited Income Tax Appeal E142 of 2023 (2025) Background Traneshvi Limited operates a real estate business generating rental income through 11-month renewable tenancy agreements. 2018: KRA conducted an audit covering tax years 2015-2017 which reconciled with the company’s declared rental income and verified claimed expenses. No issues were […]
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Contract of Service Vs Contract for Service

The Kenyan law clearly distinguishes between an employee (contract of service) and an independent contractor (contract for service). Section 2 of the Income Tax Act, a “contract of service” implies an employer-employee relationship, while a “contract for service” denotes an independent contractor arrangement. A contract of service is one that creates rights and responsibilities between parties […]
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