@ Ectasy

Is there a notice to this effect post a link please.......


Its just me
whatever choice you make in life make sure that you can live with it.

I believe the section in contention is as highlighted below [italics mine]:

'20.
(1) Subject to conditions specified by the Minister under section
130-
(a) a unit trust; or
(b) a collective investment scheme set up by an employer for purposes
of receiving monthly contributions from taxed emoluments of his
employees and investing them primarily in shares traded on any
securities exchange operating in Kenya,

registered by the Commissioner,shall be exempt from income tax except
for the payment of withholding tax on interest income and dividends as a
resident person as specified in the Third Schedule to the extent that its unit
holders or shareholders are not exempt persons under the First Schedule.


(2) All distributions of income,and all payments for redemption of
units or sale of shares received by unit holders or shareholders shall be deemed to
have been already tax paid'
Section 20 Ref: http://www.kra.go.ke/inc...df/Incometaxact2008.pdf

I see where KRA is coming from. My contribution and that of my company which go to the unit trust are tax exempt. In other words,Before I pay taxes,I deduct my contribution to the unit trust and then pay KRA based on the balance of the salary. However,KRA has also set a threshhold for taxable receivable after one retires. Amounts received which are below the set amount are tax exempt. This amount should always be respected even if one is getting their money from unit trusts..




Baada ya dhiki,faaraja

'At stake is the survival of some fund managers who over the last decade failed to charge withholding tax on returns from unit trusts,gaining an edge over rivals who chose to err on the side of caution in interpreting Section 20 of the Income Tax Act...

The difference in interpretation of the law has created an uneven playing field with some unit trust providers endearing themselves to investors through higher returns secured by not deducting the withholding tax rather than superior judgement calls on market dynamics.

KRA has now turned the heat on this group of service providers with a demand that they pay an estimated Sh200 million in taxes,for returns paid out to members over the last couple of years....

affected fund managers are suddenly liable to pay millions of shillings in backdated dues including penalties and interest charges for failing to deduct and remit tax on distributions.....

That would put the very future of some unit trust schemes in jeopardy,more so because the withholding tax in question was paid out to members in returns over the years.

Failure to remit tax proceeds to KRA attracts a fine of 20 per cent and a penalty interest of 2 per cent for each month that the amount remains outstanding.

The taxman is said to have already issued refund notes to five unit trust providers running into hundreds of millions.'

Old Mutual reportedly one of the culprits as alluded to in the articles...as funds flow into the NSE,the past impeccable name of a firm may not necessarily hold going forward. It does help to blog here on SK if you encounter illogical actions from any of our current preferred brokers.