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Tax obligations for professional services
Rank: Member Joined: 8/8/2009 Posts: 171
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Hello all, I'm about to sign a contract with a company that is registered and operates from outside Kenya (New Zealand). The scope of engagement is for me to offer professional engineering/IT services as an indipendent contractor. I will offer these services to the company's clients both within and outside Kenya. The contract stipulates that I will be responsible for any local statutory tax obligations accruing from this engagement's service fee - interchangeably referred to as Salary, in sections of the contract. Who has pointers as to what tax obligations I'm staring at? What are my legal options of swimming on the safe side of the Taxman's pool? I only have a week to signal my agreement to the contract. Thanks in advance. ¡ʇɹoɟɟǝ ƃuıɟɟǝ ǝɥʇ ɹoɟ ɥɔnɯ os ؛uıɐʌ uı ɔıqɐɹɐ ƃuıuɹɐǝן pǝıɹʇ ı
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Outvestor wrote:Hello all,
I'm about to sign a contract with a company that is registered and operates from outside Kenya (New Zealand).
The scope of engagement is for me to offer professional engineering/IT services as an indipendent contractor.
I will offer these services to the company's clients both within and outside Kenya.
The contract stipulates that I will be responsible for any local statutory tax obligations accruing from this engagement's service fee - interchangeably referred to as Salary, in sections of the contract.
Who has pointers as to what tax obligations I'm staring at? What are my legal options of swimming on the safe side of the Taxman's pool?
I only have a week to signal my agreement to the contract.
Thanks in advance. Big question is whether to charge VAT or not. Life is short. Live passionately.
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Rank: Member Joined: 7/1/2009 Posts: 247
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sparkly wrote:Outvestor wrote:Hello all,
I'm about to sign a contract with a company that is registered and operates from outside Kenya (New Zealand).
The scope of engagement is for me to offer professional engineering/IT services as an indipendent contractor.
I will offer these services to the company's clients both within and outside Kenya.
The contract stipulates that I will be responsible for any local statutory tax obligations accruing from this engagement's service fee - interchangeably referred to as Salary, in sections of the contract.
Who has pointers as to what tax obligations I'm staring at? What are my legal options of swimming on the safe side of the Taxman's pool?
I only have a week to signal my agreement to the contract.
Thanks in advance. Big question is whether to charge VAT or not. Services outside Kenya - No VAT Services within Kenya - charge VAT. Corporate Tax paid on quarterly basis, based on previous years financials.
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Rank: New-farer Joined: 2/14/2015 Posts: 97 Location: Kenya
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Outvestor wrote:Hello all,
I'm about to sign a contract with a company that is registered and operates from outside Kenya (New Zealand).
The scope of engagement is for me to offer professional engineering/IT services as an indipendent contractor.
I will offer these services to the company's clients both within and outside Kenya.
The contract stipulates that I will be responsible for any local statutory tax obligations accruing from this engagement's service fee - interchangeably referred to as Salary, in sections of the contract.
Who has pointers as to what tax obligations I'm staring at? What are my legal options of swimming on the safe side of the Taxman's pool?
I only have a week to signal my agreement to the contract.
Thanks in advance. Realizing it's an international contract that you are about to sign, it may be important to have your Kenyan lawyer review the contract.
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Rank: User Joined: 8/15/2013 Posts: 13,236 Location: Vacuum
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I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income If Obiero did it, Who Am I?
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Rank: Veteran Joined: 11/9/2009 Posts: 2,003
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Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income 180 days per year or consecutive days?
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Rank: User Joined: 8/15/2013 Posts: 13,236 Location: Vacuum
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radio wrote:Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income 180 days per year or consecutive days? If you spend 180 days in kenya cumulatively per year If Obiero did it, Who Am I?
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income He is a Kenya so the 180 day rule doesn't apply. Life is short. Live passionately.
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Rank: Elder Joined: 10/3/2008 Posts: 4,057 Location: Gwitu
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sparkly wrote:Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income He is a Kenya so the 180 day rule doesn't apply. I think 183 days rule applies only when you don't have a permanent home in Kenya. If you have, it doesn't matter how many days you are in Kenya. Truth forever on the scaffold
Wrong forever on the throne
(James Russell Rowell)
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Rank: Member Joined: 8/29/2008 Posts: 571
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kaka2za wrote:sparkly wrote:Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income He is a Kenya so the 180 day rule doesn't apply. I think 183 days rule applies only when you don't have a permanent home in Kenya. If you have, it doesn't matter how many days you are in Kenya. What is a PERMANENT HOME in a globalized world?Is it owning a house where I stay while in Kenya ? Is it where my children and wife lives??
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Ali Baba wrote:kaka2za wrote:sparkly wrote:Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income He is a Kenya so the 180 day rule doesn't apply. I think 183 days rule applies only when you don't have a permanent home in Kenya. If you have, it doesn't matter how many days you are in Kenya. What is a PERMANENT HOME in a globalized world?Is it owning a house where I stay while in Kenya ? Is it where my children and wife lives?? Permanent home is a permanent house where a person lives with his/her family. A person pays tax where he/she is "resident". A person can live, travel, work, holiday, invest in many countries but is resident in one (if the countries have a tax treaty). In case of a dispute where a person is resident, then you have the "tie breaker" rules. Where does he live (some guys live on a boat and sail up and down a river through different countries), citizenship, economic indications eg where bank accounts are held. If all rules fail, the countries have to agree with what he says about his residency. Life is short. Live passionately.
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Rank: Member Joined: 8/8/2009 Posts: 171
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This aspect of residency and workstation.... how does it pan out for someone who may be physically living in Kenya, but working remotely (via internet) on assignments outside the country? ¡ʇɹoɟɟǝ ƃuıɟɟǝ ǝɥʇ ɹoɟ ɥɔnɯ os ؛uıɐʌ uı ɔıqɐɹɐ ƃuıuɹɐǝן pǝıɹʇ ı
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Rank: User Joined: 8/15/2013 Posts: 13,236 Location: Vacuum
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kaka2za wrote:sparkly wrote:Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income He is a Kenya so the 180 day rule doesn't apply. I think 183 days rule applies only when you don't have a permanent home in Kenya. If you have, it doesn't matter how many days you are in Kenya. So I guess where the source of income earned will be used to determine tax status. But whatever the case, I think as a kenyan citizen, he will still be required to pay taxes unless he is exempted If Obiero did it, Who Am I?
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Rank: Member Joined: 8/29/2008 Posts: 571
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Swenani wrote:kaka2za wrote:sparkly wrote:Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income He is a Kenya so the 180 day rule doesn't apply. I think 183 days rule applies only when you don't have a permanent home in Kenya. If you have, it doesn't matter how many days you are in Kenya. So I guess where the source of income earned will be used to determine tax status. But whatever the case, I think as a kenyan citizen, he will still be required to pay taxes unless he is exempted How it works in the real world.If I worked say for 7 months in DRC,and I had left my wife in a Permanent home in Umoja,no one declares the income earned in DRC.Show me one kenyan who declared income which he/she earned in a foreign country even if they stayed for 183 days in Kenya.Show me just one Kenyan,boss....
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Rank: User Joined: 8/15/2013 Posts: 13,236 Location: Vacuum
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Ali Baba wrote:Swenani wrote:kaka2za wrote:sparkly wrote:Swenani wrote:I assume that you will only pay taxes to the income earned in Kenya i.e for the work done in Kenya-Forincome earned outside Kenya or services offered outside kenya you wont be liable for taxes
But then again,if you spend more than 180 days in Kenya,then you will have to pay taxes regardless of where you earned the income He is a Kenya so the 180 day rule doesn't apply. I think 183 days rule applies only when you don't have a permanent home in Kenya. If you have, it doesn't matter how many days you are in Kenya. So I guess where the source of income earned will be used to determine tax status. But whatever the case, I think as a kenyan citizen, he will still be required to pay taxes unless he is exempted How it works in the real world.If I worked say for 7 months in DRC,and I had left my wife in a Permanent home in Umoja,no one declares the income earned in DRC.Show me one kenyan who declared income which he/she earned in a foreign country even if they stayed for 183 days in Kenya.Show me just one Kenyan,boss.... With the automation of annual returns and requirement to fill in your bank details, KRA will soon catch up with them na mtalilia kwa choo. You are better off stealing from KDF armory than evading to declare your income If Obiero did it, Who Am I?
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Rank: Hello Joined: 12/18/2015 Posts: 6
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In offering the professional services, you will be required to consider the following tax issues.
1. VAT- for local it will be subject to VAT at 16% and where exported it will be zero rated. A key determinant for this will be "use and consumption"
2. WHT- This may be applicable due to the nature of technical services. The rate may vary depending on where the recipient of the service resides and whether there is DTA between kenya and the country resident/consumer of the service.
3. Income tax-This will be taxable income whereas the expenses will be allowable for tax purposes.
4. PAYE-With regards to employment taxes, it will depend as to whether you will pay your employees (if any) or whether you will be paid salaries and wages by the contracting entity.
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