ChapterXTaxSysteminEastAfricanCountriesModerntaxsystemsconsistofalimitednumberofindirectanddirecttaxes,theformerboundtoincomeuse,thelatterrelatedtoincomeformation.Themaincomponentsofindirecttaxesaretheexcisetaxes(andsimilartaxes)leviedonconsumptiongoodsandtheVATasageneralconsumptiontax.Directtaxesareincomeandprofittaxes(onlabourandcapitalincome)oftenaccompaniedbypropertytaxes.Intheindustrialcountriestherelevanceofdirecttaxationforthetotaltaxrevenueissubstantiallyhigherthaninthedevelopingcountriesduetoahighershareofofficialmarketincome.AllPartnerStatesoftheEAChavequiteasimilartaxstructureregardingthemaincomponents.1.MainTaxes1.1ValueAddedTax(VAT)TheVATsystemsareprincipallyinaccordancewithinternationalstandards,e.g.therighttodeducttheinputtax,toexemptexports,toburdentheconsumerinsteadofthecorporationandtoavoidthecumulativeimpactsofgrossturnovertaxes.1.1.1Kenya1.1.1.1TaxpayerVATinKenyaisregulatedbytheValueAddedTaxActCAP476andtheSubsidiaryLegislations(RevisedEdition,2004).Thetaxpayerisdefinedasataxablepersonbeingliabletoapplyforregistration.Registrationcanbemandatoryoronavoluntarybasis.Thethresholdforregistrationis5mill.KES/year(66,000USD).1.1.1.2Taxablescope,timeandplaceTaxabletransactionsarethesupplyofgoodsandservicesaswellasimports.1.1.1.3theExemptionsExemptionsareregulatedinthe3rdscheduleandcomprisefinancialandinsuranceservices,educationandtrainingservices,healthandsanitaryservices,agriculturalservices,socialwelfareservices,burialservices,transportationservices,rentingandleasingoflandandresidentialbuildings,postalservices,touroperationsandtravelagencies,entertainmentservices,accommodationandrestaurantservices,conferenceservices,carparkservicesandtransportationoftourists–thisisthelongestlistofallmembercountries.1.1.1.4thetaxbaseThetaxbaseoftheVATisthepriceforwhichthesupplyisprovided(dealingatarm’slength)andthecustomsvalueforimports.Regulationsfortaxyieldadjustmentsdonotseemtoexist.1.1.1.5TaxrateThestandardtaxrateis16%andareducedrateof12%existsforthesupplyandimpo...
