The Tax Laws (Amendment) Act, 2020 amended the rate of Corporation Tax for resident persons from 30% to 25% with effect from 1st April 2020. The rate was reversed to 30% with effect from 1st January 2021 through the Tax Laws (Amendment) (No.2) Act, 2020.
Kenya Revenue Authority wishes to inform the public that the Resident Corporation Tax Return (IT2C) on iTax has now been updated to provide for the above amendments. The following changes have been made to the return: -
1. For resident persons whose accounting period ends on or before 31st March 2020, the applicable corporation tax rate shall be 30%.
2. For resident persons whose accounting period ends between 1st April 2020 and 31st December 2020, the applicable corporation tax rate shall be 25%.
3. For resident persons whose income is earned or accrued after 1st January 2021, the applicable corporation tax rate shall be 30%.
4. For resident persons whose accounting period began in the year 2020 and terminates in the year 2021, the corporation tax rate shall be applied as follows: -
• 25% for income earned in the period prior to 1st January 2021.
• 30% for income earned in the period commencing on or after 1st January 2021.
5. The return shall allow for offsetting of tax credits like Digital Service Tax (DST), Minimum Tax, Advance Tax, Withholding Tax and Instalment Tax paid during the accounting period, against the established tax liability at the end of the year.
6. Minimum Tax will be captured under the Instalment Tax sheet while DST credits will be captured under row 13.8 in the tax computation sheet.
The IT2C return can be accessed through the taxpayer’s portal on iTax or through the following link: - https://www.kra.go.ke/en/downloads