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Section 37 of the Income Tax Act makes it the employer’s statutory duty to deduct income tax from the pay of his liable employees and remit the same to KRA by the 9 th of the month following payroll month.

Overview

Employees should be read as including, for example, company director (resident or non- resident).

If a person is resident at the time of employment or rendering the services, he is under Section 5 (1):

Liable on any amount paid to him on work performed in Kenya or elsewhere. Whether or not the employer is resident is immaterial.

How PAYE operates

Employer calculates and deducts tax from employees’ monthly emoluments.

Employer records pay and tax particulars on each employee’s tax deduction form (P.9 forms).

Tax deducted is remitted to KRA on or before the 9 th of the month following that in which the deduction has been made.

Where no tax has been deducted, an employer should provide a nil PAYE credit pay-in- slip.

After 31 st December but on or before 30 th June of the following year, employee files with KRA a self-assessment return on the PAYE payable and remitted in preceding calendar year.

Employers Responsibilities

Deduct PAYE tax at source and pay to KRA.

File the requisite Returns

Maintain proper accounting records

Employees Responsibilities

Obtain PIN.

Compute own taxes and pay to KRA.

File individual self-assessment return.

Non Compliance Issues.

Failure to deduct PAYE where applicable.

Failure to submit returns or Nil returns.

Failure to remit PAYE.

Late remittance and/or filing.

Failure to maintain and produce required records.

Failure to use the appropriate rates and methods for taxing benefits.

GFS can help you meet PAYE regulations in many ways including:

Reviewing PAYE risk and assessing opportunities.

Structuring employee compensation.

Tax planning for expatriate and executive staff.

Preparing and filing tax returns for your expatriate and executive staff.