Pay tax and pay zero tax is a bit of contradictory message. We have all heard the most frequent messages from the government. Every person want to pay zero tax. Nobody wants to pay a lot of tax . People are always exploring ways to pay, if not negative tax, zero tax.
The question remains whether it is possible to pay tax and pay zero tax. The answer is YES. There are legal ways to pay zero tax.
Pay Tax?
To pay tax and pay zero tax means that:
- A person does not have any principal tax to pay.
- A person does not pay any penalties.
- A person does not pay any interest.
- A person is not fined.
- A person does not face the possibility of jail time.
The person has already paid all the taxes due from them. The following are some steps you can take to pay tax and pay zero tax …
Income tax
According to Income Tax Act Cap 470, Section 3 (1) on Charge to Tax, income tax is “charged for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.”
To pay Zero Income Tax – make sure you do not have income accrued in or derived from Kenya.
Value Added Tax
According to the Value Added Tax Act (2013) Section 5 (1) on Charge to Tax, Value Added Tax is charged under the provisions in the Act on:
- A taxable supply made by a registered person in Kenya
- The importation of taxable goods; and
- A supply of imported taxable services.
To pay Zero Value Added Tax – make sure you do not consume any of the above.
Domestic Excise Duty
According to the Excise Duty Act (2015), Section 5 (1) Excise duty shall be charged following the provisions of the Act on:
- Excisable goods manufactured in Kenya by a licensed manufacturer;
- Excisable services supplied in Kenya by a licensed person; or
- Excisable goods imported into Kenya.
Excisable goods are the goods specified in Part 1 of the First Schedule, while excisable services are services specified in Part 11 of the First Schedule of the Act.
To pay Zero Income Domestic Excise Duty – make sure you do not consume any of the goods and services that contain any products (goods and services) in Part I and II of the First Schedule in the Excise Duty Act (2015).
Customs Duty
The East African Community Customs Management Act (2004) is a Community Act to make provisions for the management and administration of Customs and related matters. This Act guides the application of Customs duty on dutiable goods into the East African Community partner states.
To pay Zero Customs Duty – make sure you do not consume or use any dutiable goods or goods subject to customs duty in Kenya or elsewhere in the East African Community.
Conclusion
Suppose a person wants to pay zero tax in Kenya. In that case, they should not have any income that is subject to Income tax, they should not consume any good or service subject to Value Added Tax or Excise duty, and they should not consume or use any dutiable product.
Question
Is it practically possible to pay zero tax in Kenya?
This post was on pay tax to pay zero tax.
We trust you have learnt something.
Thank you for reading the post.
Dr. Wakaguyu wa-Kiburi
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