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Advance Tax Payment PDF Print

INTRODUCTION

Section 12A of the Income Tax Act (Cap 470) was introduced by the Finance Act. 1995, and came into force with effect from 1st January 1996. It provided for the payment of a tax 'to be known as Advance Tax', in respect of commercial vehicles that are licensed to operate on Kenyan roads.

Commercial Vehicle:

This is a road vehicle which is:-

  • Manufactured for the carriage of goods and so used in connection with a trade or business; or
  • A motor omnibus as defined in the Traffic Act; or
  • Used for the carriage of members of the public for hire or reward.

This includes such road vehicles as vans, pick-ups, trucks, lorries, station wagons, minibuses, buses, and coaches.

Rates:

Commercial vehicles are classified in two categories: those that carry loads, and those that carry passengers, and the rates of payment of the advance tax are different. The current rates (wef 14.06.2001) are:

- For load carrying vehicles - vans, pick-ups, trucks and Lorries:-

  • Kenya shillings one thousand five hundred (1500) per ton load capacity per year, or
  • Kenya shillings two thousand four hundred (2400) per year,

Whichever is the higher.

- For passenger carrying vehicles - saloons, station wagons, minibuses, buses and coaches:-

  • Kenya shillings sixty (60) per passenger capacity per month, or
  • Kenya shillings two thousand four hundred (2400) per year,

Whichever is the higher.

Mode of payment

The Commissioner is empowered to prescribe the conditions and procedures governing the payment of Advance Tax. Currently, the tax is paid at the time of obtaining the PSV license (in the case of conductors and drivers) and at the time of booking for inspection (in the case of commercial vehicle).

Payments are made at all KRA offices where PSV licenses are issued and from designated Domestic Taxes Department offices.

Where the receiving office is not computerized, a manual receipt is issued and the vehicle owner should give all his particulars - full names, Personal Identification Number (PIN), vehicle registration number and address to facilitate issuance of a computerized receipt. This should be received by the vehicle owner within a short period.

End-Of-Year procedure for vehicle owners:

As the name implies, Advance Tax is a personal tax liability paid in advance. The vehicle owner should claim a deduction in respect of the amount paid in any year when submitting tax returns (self-assessment returns) for that year. The amount so claimed shall be set-off against the years'tax liability and where there is nil tax liability, an appropriate refund will be made, subject to the satisfaction of the Commissioner that the refund is correctly due.

Public institutions and exempt organizations

No Advance Tax is payable in respect of commercial vehicles that are registered in the names of Public Institutions (e.g. Public schools, Government Ministries etc) and organizations that are exempt from tax. However, such bodies must produce appropriate evidence of
their status to the Commissioner
for Authority not to pay the Advance Tax.

 



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