Perhaps it is time for us to consider defining a third category of workers – „dependent consultants“. Some of the more developed economies that rely heavily on technology, such as the United Kingdom and the United States, already consider this third category. With the way an employee can serve multiple organizations comes with a great mystery about tax treatment – are workers subject to PAYE or are they independent advisors subject to withholding tax (WHT)? The lack of clarity between a service contract and a service contract has given rise to disputes, both locally and in other jurisdictions. Independent consultants who consider themselves employees sued their „employers“ for dismissal and other employment-related benefits. Independent consultants, on the other hand, are free to determine the means to achieve the agreed outcome. Essentially, then, a client can dictate the „what“ of the outcome to an independent consultant, but not the „how“ of the production. Independent consultants who consider themselves employees sued their „employers“ for dismissal and other employment-related benefits. photo file | Consultants dependent on the NMG would be an intermediate category of employees located between the employee and the independent consultants. They would typically enjoy certain benefits that traditionally apply exclusively to employees, such as . B vacation days, but no final benefits. The delivery time for VAT purposes is as soon as possible: If the person holds a management position in the management structure or in the organogram, this may indicate that someone is an employee. If the organization has integrated the person into its organization or office, for example.

B by allocating allocated spaces, then naturally the question of „independence“ is called into question. DTAs provide for lower or lower withholding tax rates in certain cases. Not all reduced tax rates in a DTA apply automatically, but are subject to the limiting benefits provisions of Kenya`s Income Tax Act (ITA). If a payer does not withhold tax, the tax is deemed to be due and payable by him as if he were the person who received the income and the due date for payment is the date on which the amount of tax should have been transferred to kra. Businesses are required to deduct and account for PAYE from all remuneration (cash and cashless) paid or paid to employees. Kenyan residents are taxed on their income earned worldwide. PayE applies on the basis of a staggered scale with tax rates ranging from 10% to 30%. On the other hand, an independent consultant is independent in the sense that he can make a financial loss if his turnover is less than the costs he incurred to generate that income.

The 2020 Finance Act introduced a minimum tax to be paid by individuals whose total instalment tax payable in a year of income is less than 1% of the company`s gross turnover. This tax is expected to enter into force on 1 January 2021. On 19 April 2021, the High Court issued protective regulations suspending the implementation of the minimum tax until a motion challenging the constitutionality of the minimum tax provisions is decided. The result is that a person who is comfortably on their couch hundreds of miles away can analyze the data sent via email, create a detailed analysis, and create a report to the organization via email or through a data exchange page. Another key aspect is the economic reality of the agreement. In employment contracts, the employer incurs economic benefits and risks because the employee is assured that he will receive his salary regardless of his performance during that particular period. Functions such as business unit registration are handled exclusively by the national government. County governments have the authority to issue and charge fees for licenses such as business permits and fire safety certificates. Government fees for establishment permits and fire safety certificates depend on the type of business in which the person operates, the size of the office space they occupy, and the number of employees. The above permits and certificates may be renewed annually.

Dividends paid to a resident company controlling 12.5% or more of the share capital of the company paying the dividends are exempt from withholding tax. A reduced rate of 5% applies to dividends paid to citizens of the East African Community and a reduced rate of 15% applies to consulting fees paid to citizens of the East African Community. Can an employer choose to pay its employees with the payroll deduction or paye plan? The withholding tax can be claimed by the beneficiary when submitting his annual tax return and is not an additional tax What is the penalty for tax without deduction? A default penalty of 5% also applies to tax due with default interest of 1% per month for the period during which the tax remains unpaid. Boi regulation requires a company, among other things: Sales tax is payable by any resident person, including companies whose turnover is greater than KES 1 million but does not exceed or should not exceed KES 50 million in an income year. The applicable tax rate is 1% of the company`s gross income as of April 25, 2020. VAT is due on 20 September. Due and payable each month following the month to which the tax relates. Currently, a business is considered low-capitalized if it is under the control of a non-resident person, alone or with four or a few other persons, and if the highest outstanding amount of all loans at any time of the year exceeds three times the sum of the corporation`s retained earnings and the issued and paid-up capital of all classes of shares (i.e., the debt-to-equity ratio is greater than 3:1). For entrepreneurs and licensees in the extractive industries (i.e., mining and oil), the debt ratio to determine if it is low capitalized is 2:1. Employers are also required to register with the NHIF and deduct and account for monthly NHIF contributions for each employee based on their monthly income. There is currently no registration fee. Currently, there is no stamp duty on the registered capital authorized at the time of incorporation.

Stamp duty is levied on each increase in the authorized share capital of a company and on the transfer of shares at the rate of 1%. The specific effects of stamp duty resulting from debt financing depend on the type of debt instrument. . From 7 November 2019, taxpayers can apply for an exemption from the CGT for the transfer of property required by a transaction involving the incorporation, recapitalisation, acquisition, merger, separation, dissolution or similar restructuring of a legal person if such a transfer: the courts have ruled the existence of an employer-employee relationship, when a person depends on the tools to be used and the way in which the task is carried out. Kenya`s legal system is based on English customary law, the main sources of law being the Constitution of Kenya of 2010, Acts of Parliament, common law, doctrines of equity and laws of general application in force in England in 1897. In their decisions, Kenyan courts may refer to African customary law in civil matters, provided that it does not violate justice and morality or is inconsistent with other written laws. Anyone employing one or more employees must register with the NSSF as a contributing employer. Employees must also register as members of the NSSF. There is no registration fee…