From Kenya: Guidelines on Issuance of Tax Exemptions

Source: Philip Muema or Brian Kangetta, Andersen Tax in Kenya, a member firm of Andersen Global

In Kenya, tax exemption is provided for in Articles 210 (1) and (2) of the constitution. However in practice, the procedures on application, processing and approval for tax exemption are provided for in specific tax laws and legislations. This has made it complex for the national government to monitor and complete regular reviews on the approvals. This has led to unregulated issuance of exemptions which is against the public good.

To resolve the issue, Kenya's Ministry of Finance (the Treasury) issued guidelines to structure the issuance of tax exemptions for projects undertaken by Ministries, Departments and other Agencies (MDAs). The objective is to streamline the processing of tax exemption applications from MDAs to the National Treasury. Further, the guidelines are aimed at fostering accountability, protecting public interest and supporting the implementation of the constitutional principle of the rule of law.

The guidelines will regulate:

• Specific exemptions such as:
  • Request for exemptions
  • Amendment and rejection of an application
  • Processing of an exemption
  • Exemption for goods and equipment including motor vehicles
  • Exemption from Value Added Tax (VAT) on services
  • Temporary importation
  • Exemptions under the special operating framework arrangements with the government
  • Field project visits
  • Reporting​
• Audit of Exemptions

The accounting officers are required to comply with the guidelines with immediate effect.