Persons With Disability

Local news daily left me in awe at the present state of Persons with Disability (PWD) within our Economy.

 The article Titled “ The Disabled still pay tax despite exemptions”  goes something like this;  in Kenya it is estimated that about 4 million people suffer from various forms of disability, both mental and physical.

I want to make this point across from the get-go , According to the  Act 14 of 2003 – Persons with Disability  and Persons with Disabilities (Income Tax Deductions and Exemptions) Order, 26^th March 2010 has taken into consideration PWD in terms of their incomes and their contribution toward taxes in Kenya.

According to the Act Sec 2 –Disability is described as a physical, mental or other impairment including any visual, hearing, learning or physical incapability, which impacts adversely on Social, Economic or Environmental participation.

Having the definition right, a question may be posed:  How do I benefit as a Disabled individual as per this Act?

The answer lies in the Persons with Disabilities order 2010 by the then Finance Minister Uhuru Kenyatta.

Sec 4(1) of the Order states that a person with disability may apply for exemption of Income tax to the Commissioner of Domestic taxes through the National Council of Persons with Disability and subject to (2) the amount allowable shall be Kshs 150,000 per month.

In addition to the above deduction the following shall be considered when determining total income:

(a)   Non-reimbursed amounts paid by a person with disability for  treatment  or admission   in a hospital, nursing home or any other health facility;

(b)   Non-reimbursed amounts paid by a person with disability for prescription      drugs for that person’s use;

(c)  Non - reimbursed amounts paid by a person with disability for goods and services that allow the person with disability to receive home care or personal care; or

(d)  Cost of disability related assisting devices.

Provided the total of the above considerations doesn’t exceed Kshs 50,000 per month.

A recap of the above a person who qualifies for Disability under the act shall qualify to exemption of the first Kshs 150,000 of their income per month and an addition of 

Kshs 50,000 per month for the expenses for maintaining his/her condition.

Let’s go back to why I was left in awe;

As per the daily 15,000 people may be eligible to the exemption stated above, but they in all unknowing or knowingly still pay their taxes month in month out. As per the dated release of the newspaper article only 200 individuals were benefiting from the above exemptions, and 700 individuals pending for approval, a number as per the author still very low.

In the article the then Communication Officer of the Council was of the opinion that many disabled people are not yet aware that they were entitled to the tax exemptions on their salaries and they (Council) was going to boost awareness on the same.

How hard could it be for a person qualifying for this exemption to apply to the Commissioner of Domestic taxes?

First the individual needs to register with the National Council of Persons with Disability (NCPWD) , a process as per their online requirements ;

1.        A copy of PIN  Certificate

2.        A certified copy of current pay slip where applicable

3.        A copy of the national Identification card

4.        A copy of a doctors medical report from the Government Gazetted Hospitals

5.        A letter from the employer were applicable stating the nature of disability

As per the guidelines of Kenya Revenue Authority (KRA) under the legal notice no.36

1.        The individual will then present himself for interviews before the Domestic Tax department officers in the nearest KRA offices.

2.        He will also provide any relevant information required to support the application as called upon.

Area of Concern: When our government offers such incentives to persons with disability, it does not in any way consider them less equal to other. A point should be noted here that, by doing so the government through the Ministry of Finance is only trying to lighten the plight being faced by these persons that may arise suddenly and if such considerations are not considered, an individual who was productive before the disability may be tied down by costs, medical expenses or the actual disability.

Disclaimer: This article will be adjusted upon receiving further information from the National Council of Persons with Disability

 

Ref

• 1.   Standard Digital news updated Wednesday, July  14 2010 at 00.00 GMT
• 2.   Act 14 0f 2003- Persons With Disability
• 3.   Persons with Disabilities (Income Tax Deductions and Exemptions) Order, 2010
• 4.   http://www.kra.go.ke
• 5.   http://www.ncpwd.go.ke
• 6.   http://www.ncpwd.files.wordpress.com 
• 7.   http://www.kenyalaw.org/klr/index.php?id=445 

Its called Withholding Tax and its this simple

So we are blessed with a new year. The best wishes from us here at Ongz Solutions.

Been out of the scene for a while but let me look at an issue that raises a great deal of confusion-Withholding Tax(WT)

Withholding Tax – in its efforts to diversify the type of taxes the tax regulating authority in our case KRA,  makes use of Withholding taxes.

This refers to a tax which is withheld by the payer of a service or from the following sources of income:

Interest, dividends, management or professional fees, royalties, commissions, rent, appearance and performance fees for entertaining, pension or retirement annuity, sporting or diverting an audience.

1. Dividends;

• A rate of 5% for resident individuals and for listed shares for the citizens of East African Community
• 10% for Non Residents
• Nil tax for an institution that qualifies as a Financial institution
• Nil for an individual or an organization that has ownership of more than 12.5% of the controlling interests of the paying Company

2. Interest;

• Interest from Financial Institutions for example our local Commercial Banks are deducted at a rate of 15%

• Bearer certificates are withheld at a rate of 25%
• Bearer bonds withholding tax at 10%

3. Management or Professional Fees or Technical Service Fee;

• At 10% withholding rate for services provided by a resident
• A rate of 20% is utilized for services provided by a Non-Resident  

4. Royalties;

• A rate of 5% is directly withheld for royalties payable to a resident
•  20% will be the rate utilized for royalties payable to a non-resident

5. Commission;

• A rate of 15% on commission issued by Insurance companies

6. Rent;

·        A rate of 20% is withheld for rent  receivable by a Non-resident

7. Appearance and performance fees for entertaining;

• A rate of 20% is withheld for the above fees if payable to a Non-resident
• The same rate of 20% is withheld for payable fees for Supporting, assisting or arranging an appearance. This case applies to Non-Residents

8. Pension or Retirement Annuities;

• A  rate of 5% is withheld for Pension or Retirement Annuities being received by a Resident individual

 9. Winnings from betting and gaming

• For both residents and ‘non residents are now subject  to withholding Tax a rate of 20% has been proposed as per Finance Act 2012.The withholding tax is a final tax for resident individuals Only

 

A Point should be noted : the withholding organization or individual has up to the 20th day of the next month to file the returns and submit the same to KRA failure which attracts penalties and interests.

The individual from whom the Withholding Tax was withheld from should hold on to the Withholding Certificates (as supporting documents) that will be utilized to reduce the final tax at the preparation of Final Financial Reports.