The Kenya Revenue Authority (KRA) has announced the implementation of Legal Notice No. 105 of 2024, which introduces new rules governing Income Tax exemptions for charitable organizations and tax-deductible donations.
In a notice dated February 18, KRA notified taxpayers of the operation of Legal Notice which came into force on 18th June 2024.
These Rules guide on the requirements for Income Tax exemption under Paragraph 10 of the First Schedule to the Income Tax Act as well as the conditions for deductibility of expenditure on donations under Section 15(2)(w) of the Income Tax Act.
Regarding the application of the Rules to Income Tax exemptions under Paragraph 10 of the First Schedule to the Income Tax Act, any application for Income Tax exemption submitted after the effective date of the Rules must comply with the prescribed requirements.
Organizations that had already been granted exemptions before the Rules came into force are required to meet these requirements by June 18, 2025, in accordance with the one-year transition period outlined in Rule 27.
KRA warned that failure to comply by the specified date may result in the revocation of the exemption, as provided for in Rule 20.
“Going forward, any previous publications and communication on Income Tax exemption under Paragraph 10 of the First Schedule to the Income Tax Act and on deductibility of expenditure relating to donations that are inconsistent with the Rules are invalid to the extent of the inconsistency,” KRA said.
Accessing Rules & Assistance from KRA
The Rules are available on the KRA website and can be accessed via https://kra.go.ke/images/publications/L.-N.-105-The-Income-Tax-Act–Charitable-ORG-and-Donations-Exemption-Rules-2024.pdf.
For any clarification or further guidance, taxpayers are advised to visit the nearest Tax Service Office (TSO).
They can also reach out through telephone +254(020) 4 999 999, +254 (0711) 099999 or via email callcentre@ kra.go.ke.
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Tax Exemptions in Kenya
Ther are certain individuals, organizations, and groups qualify for tax exemptions under the Income Tax Act, VAT Act, and other tax laws.
Registered charitable organizations, trusts, and non-governmental organizations (NGOs) are among the organizations who can qualify for tax exemption.
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Other groups include persons with disabilities (PWDs), diplomatic missions and foreign entities, government institutions and state corporations and religious organizations.
Educational institutions, pension schemes and retirement benefits, as well as investors in Special Economic Zones (SEZs) and Export Processing Zones (EPZs) also qualify for exemption.
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