Kenya Revenue Authority (KRA), through a public notice released on its website, has called for the general public to send their opinions on the 2023 income tax rules drafts.
In the notice released yesterday, KRA states that it has developed a draft of income tax rules for 2023, which provides guidelines and administrative procedures to be applied in granting tax exemptions to charitable organisations.
“The rules provide the guidelines and administrative procedures to be applied in granting exemptions to charitable organizations and further give guidance on donations to such institutions,” the notice read in part.
Interested members are requested to channel their contributions to the Commissioner General, Kenya Revenue Authority, P.O Box 48240-00100, Nairobi, or by email to stakeholder.engagement@kra.go.ke to be received on or before December 29, 2023.
According to the draft, a charitable organisation that accrued in or was derived from Kenya shall be exempt from tax to the extent that the Commissioner is satisfied that the income of such a charitable organisation is to be expended either in Kenya or in circumstances in which the expenditure of that income is for the purposes which result in the benefit of the residents of Kenya.
A charitable organisation is beneficial to the public if the benefit accrued to residents of Kenya in general without limitation to people with a particular need or who have to satisfy some other criteria, according to the proposed regulations
For consideration for the tax waivers, the draft clearly states that an application for exemption should be made in the prescribed form provided by KRA and should be submitted to the Commissioner.
Several certified copies should be attached to the application, including registration documents, governing documents, three years of audited financial statements, assets possessed by the applicants, and their original bank statements.
According to the draft, the commissioner within the taxman shall use the below guidelines to determine whether a charitable organisation's purpose and activities to be directed towards the public benefit. They include:
- If the charitable organisation’s purpose and activities are beneficial in a manner that the beneficiaries are identifiable and can attest to the said benefits where required;
- If the benefits of charitable activities are related to the charitable organisation’s purpose;
- If the charitable organisation’s purpose and activities benefit the specified target groups or the public in general or a sufficient section of the people;
- If people living in poverty are not excluded from the opportunity to benefit and
- If it does not provide private benefits, directly or indirectly, by making any part of its income payable to or available to any person, including its creators or their families, shareholders, members, employees, office bearers, directors, trustees, or persons controlled, directly or indirectly, by such private interests except as provided in these Rules
The then CS National Treasury and Planning Ukur Yatani, on April 7, 2022, during the budget delivery, proposed a raft of the tax policy for the 2022/2023 fiscal year.
In line with the amendments was the introduction of a substitute clause that called for tax deductions on all charitable finances.
