KRA has excluded Kenyans with personal and economic interests abroad from the mandatory payment of local tax even if they stayed in the country for an entire income year.
The Finance Act 2022, signed by President Uhuru Kenyatta, introduced a new definition of ‘permanent home’ under the Income Tax Act—marking a relief to thousands of Kenyans long inconvenienced by tax demands by the Kenya Revenue Authority (KRA).
“‘Permanent home’ means a place where an individual resides or which is available to that individual for residential purposes in Kenya, or where in the opinion of the Commissioner the individual’s personal or economic interests are closest,” the Finance Act 2022 says regarding the changes that took effect on July 1, 2022.
Currently, the Income Tax Act is ambiguous with the KRA mostly deeming all Kenyan citizens to have a permanent home whether or not they live in the country.
However, under the new law, Kenyan citizens may not necessarily become ‘tax residents’ or have personal or economic interests in Kenya even if they stayed around for an entire income year.