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Taxation of Leases and Hire Purchase Transactions

id : 111 Other   
posted by : Admin
 DOQ : 2023-05-24 07:10:38
   Admin
  
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The tax treatment of lease transactions in Kenya is based on whether the lease qualifies as a lease or will be treated as a hire-purchase transaction.

If the transaction is treated as a lease, the lessor shall be eligible for depreciation on the asset. The entire lease rentals will be taxed as income of the lessor. The lessee, correspondingly, will not claim any depreciation and will be entitled to expense off the rentals.

If the transaction is a hire-purchase or conditional sale transaction, the hirer will be allowed to claim depreciation. The financing charges inherent in hire instalments will be taxed as the hire-vendor’s income and allowed as the hirer’s expense


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