Employment Tax in Kenya
Taxable Cash Emoluments in Kenya
This includes Lump sum payments such as gratuity, service payments
Employment income is assessable
on an accrual basis ; that is, over the period it has been
earned and become due for payment.
- Deemed Income
Where an amount is received in respect of employment or a service
rendered in a year of income different from the year of accrual.
It is deemed to be for the year of accrual.
However where the year of accrual is earlier than 4 years prior to the year of receipt,
the income is to be treated as that of year of income which
expired 5 years prior to the year in which the income is
received or prior to the year of income in which employment ceased. (s.5(2)(a)(i))
- Service gratuity
This amount is to be spread backwards and
taxed together with income earned in the relevant years.
- Notice pay
Notice pay is assessable in the period
immediately after date of leaving employment.
- Pay in lieu of leave
should be taxed in the year to which the leave days relate.
- Specified term contract(s.5(2)(c))
Where there is a specified term contract, the amount of the compensation will be spread
over the unexpired period at equal amounts and taxed.
- unspecified term contract(s.5(2)(c))
Where the contract is for unspecified term and does not provide
for terminal payment, the compensation is to be spread forward
in equal amounts for three years.
- Leave payment is taxable in the year it was earned.
- Life Insurance Premiums (s.5(2)(f))
an amount paid by an employer as a premium for an insurance
on the life of his employee or any of his dependants other than such an amount
paid to a registered or unregistered pension scheme, pension
fund or provident fund