The National Treasury has exempted Kenya Airways, alias KQ, from paying the minimum tax set at 1% of gross turnover. This means that the airline will now only pay income taxes when it returns to profitability in the future.
Additionally, the tax exemption extends to the airline’s subsidiaries, such as low-cost carrier, Jambojet.
The minimum tax, introduced on 1st January 2021, is to be paid if a firm’s normal corporate taxes fall below 1% of gross revenue. This seeks to ensure that firms that are in perpetual losses also contribute to the National Treasury.
In exercise of the powers confirmed by section 13(2) of the Income Tax Act, the CS for National Treasury and Planning directs that the income derived from or accrued in Kenya by an airline in which the government owns at least 45% of its shares, and the subsidiaries of that airline, shall be exempted from the provisions of Section 12(d) of the Act.
Business Daily quotes Treasury CS, Ukur Yatani.
Without the exemption, KQ was scheduled to make its first minimum tax payment by 20th April, which would cover the first three months of its current financial year.
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