The Finance Act 2020 (the Act), which was assented to by President Uhuru Kenyatta on 30th June 2020, introduced a wide range of tax and other measures aimed at raising additional revenue for the financial year 2020/21. Among the measures introduced by the Act is the Voluntary Tax Disclosure Programme (the VTDP).

The program is designed to assist taxpayers achieve tax compliance, by allowing them to voluntarily declare their historical tax liabilities to KRA and settle the principal tax, while obtaining the benefit of not having to pay, under certain conditions, the resulting penalties and interest.

The tax program will run for a period of 3 years with effect from 1st January 2021 to 31st December 2023.

The tax applies for all taxpayers provided that: –

1. The tax liabilities were accrued by the taxpayer within a period of 5 years prior to 1st July 2020.

2. The taxpayer is not under audit or investigations and is not party to ongoing litigations in respect of tax liabilities or any matter relating to the tax liabilities.

3. The taxpayer has not been notified of a pending audit or investigation by the commissioner.

The key benefit for the taxpayer is that: –

1. They qualify for relief in respect of the penalties and interest.

2. Shall not be prosecuted with respect to the tax liabilities disclosed.

The taxpayers who opt for the program will be entitled for the following: –

1. 100% waiver, if the principal tax is disclosed and paid within the calendar year 2021

2. 50% waiver, if the principal tax is disclosed and paid within the calendar year 2022

3. 25% waiver, if the principal tax is disclosed and paid within the calendar year 2023

No waiver of the penalties and interest will be available if the principal tax is paid after the third year.

It’s important to note that the relief of payment penalties and interest and prosecution shall be withdrawn by the commissioner where: –

1. The commissioner discovers that the taxpayer failed to disclose material facts in respect of the relief before the expiry of the agreement entered into with the taxpayer.

2. The taxpayer fails to meet the term of the agreement entered into with the commissioner

To take advantage of the program, please contact us for: –

1. An internal tax review to ascertain your status particularly for non-disclosures and incorrect reporting.

2. Arising from the review, we quantify the exposure and make declarations to KRA as soon as possible in order to obtain full benefit of the relief available.

For more information on this, please feel free to contact:

Benson Ngugi – benson.ngugi@attorneysafrica.com

Ken Rutere – ken.rutere@attorneysafrica.com



On 30th June 2020 the president of Kenya assented the Finance Act, 2020.

One of the key changes was on the corporation tax with the introduction of the minimum tax regime. The minimum tax payment is 1% of the gross turn over.

The effective date of the tax is 1st January 2021

The tax is a base tax payable by all whether one has made a profit or not. The income that are exempted from the minimum tax are: –

  1. Income exempted by the Act
  2. Employment income
  3. Income that is subject to residential income tax
  4. Income that is subject to Turn over Tax
  5. Income that is subject to capital gains tax.
  6. Income of extractive sectors

The minimum tax will be payable in four instalments by the 20th day of the 4th, 6th, 9th, and 12th month of the year of income.

It’s important to note that instalment tax is still applicable, but however this has been set such that where the instalment tax is higher that minimum tax, then minimum tax is payable. On the other hand, if the minimum tax is higher than instalment tax, then the minimum tax becomes payable.

Of concern is that companies which report tax losses due to investment incentives granted by the government will suffer the minimum tax which claws back the intended benefit to the investor.

Covid-19 has impacted many businesses negatively and its expected that such business will suffer loses in the coming years. The irony is that whilst the government is reducing the rate of tax for profit making companies, the introduction of the minimum tax will definitely have an impact on loss making companies and some startups.

For more information on this, please feel free to contact

Benson Ngugi – benson.ngugi@attorneysafrica.com

Ken Rutere – ken.rutere@attorneysafrica.com


Alternative Justice System Policy

In an effort to breakdown conceptual structures of legal practice and thought adopted from our colonial and post-colonial contexts– Chief Justice David Maraga, on 28th /Aug/ 2020, launched the Alternative Justice System (AJS) Policy which is aimed at enhancing access to justice and supporting expeditious delivery of justice to Kenyan citizens. The Alternative Justice Systems (AJS) policy was drafted by the Taskforce on Informal Justice Systems gazetted by the retired Chief Justice Dr. Willy Mutunga in May 2016.

The AJS policy will provide alternative forms of dispute resolution mechanisms, including traditional approaches, as long as they:

Do not Contravene the Bill of Rights,

Are not repugnant to justice or morality

Are not inconsistent with the Constitution or any written law.

During the Launch, CJ Maraga noted that; Kenyan communities have, for generations, had their own justice systems that have held, and continue to hold, societies together. With this in mind, the Alternative Justice Systems as adopted in this Policy are community-centered and reflect the lived realities of the people and, therefore, more accessible to people. 

Justice will be achieved differently: The AJS system will prevent injustice and reduce harm suffered by people by focusing on root causes of injustice and on justice needs of entire communities and societies rather than just individuals. He noted that the policy is an important guide on the operationalization of the systems, for all the institutions in the justice system sector.

His Deputy, Chief Justice Philomena Mwilu said that ideas and methods between formal Justice systems and Alternative Justice System practices and mechanisms will improve each other and deepen justice provision in the country.

We are eager to experience the changes the AJS will bring to the Kenyan citizens.