In many instances, organizations have statutory obligations to act as tax collection agents for the government. Naturally, the government wants to ensure that such organizations properly account for the taxes collected and, consequently, there are stringent compliance requirements. Any noncompliance attracts punitive penalties, significant back taxes and loss of tax relief in some cases.

To accrue the maximum benefit to our clients, we have designed a comprehensive tax health-check that will cover compliance issues with regards to Pay As You Earn (“PAYE”), Value Added Tax (“VAT”), Withholding Tax and Corporation Tax. In general, the primary objectives of the review are:

• To identify areas where the company is not complying with the tax laws and regulations and to advice on how compliance can be achieved. In effect, this reduces the company’s exposure to back taxes and penalties;
• To identify tax inefficient areas of the company’s operations and to comment on how greater tax efficiency can be achieved; and
• To identify areas of the company’s operations for which tax advantages are not being utilized.
• In practical terms, the review involves the following components and procedures:
• Pay as You Earn (“PAYE”) and Fringe Benefits Tax (“FBT”) Review

All employers are obligated to deduct PAYE from their employees and remit the same to the Kenya Revenue Authority (“KRA”).Non-compliance with the PAYE rules has perhaps the most punitive penalties of all taxes. Our review of PAYE records and operations usually enables us establish our clients’ tax exposure and to quantify the liability, if any.

Our work includes a detailed review of:

Employees’ personal files;

• Staff loans & FBT records;
• Current remuneration packages including benefits provided to staff;
  Payroll operations;
• Monthly PAYE and statutory deductions;
• PAYE and statutory deductions remittances; Directors emoluments;
• Compliance with income tax PAYE rules and regulations; and
• Cash books for outside payroll employment related payments.

Withholding Tax Review

We review clients’ books of accounts to ensure that they remit Withholding Tax as required by the Kenya Revenue Authority. Under Kenyan tax law, organizations are required to deduct withholding
tax on certain payments; whether made locally or abroad, and remit the same to the Kenya Revenue Authority. Failure to deduct withholding tax will give rise to tax exposure as such tax will be recovered from the organization.

Our work includes a detailed review of:

• Foreign loans and interest payments, if any;
• Management, technical and professional fees;
• Contractual, agency and consulting fees;
• Withholding tax returns;
• Service contracts and withholding tax remittances;
• Cash books for payments subject to withholding tax; and
• Other accounting records including payment vouchers.

Corporation Tax Review

The corporation tax review is aimed at ensuring that the company is complying with corporate tax legislation.

Our work includes:

• Review of financial statements;
• Review of corporation tax computations;
• Review of corporate tax return to ensure they are correctly prepared and submitted on time;
• Review of fixed assets registers, additions and disposals;
• Review of expenses including accruals and provisions;
• Review of tax payments, if any, and ascertain whether they are made on time; and
• Review of correspondence with the KRA.

Value Added Tax (“VAT”) Review

Our VAT review procedures are designed to help our clients to maximize tax saving opportunities while complying with the law and include:

• Invoicing and credit notes procedures;
• Fixed assets purchases and disposals;
• VAT returns and reconciliation;
• Local Purchases;
• Importation of goods and services;
• Domestic supplies, supplies procedures and exports;
• Journal entries; and
• Input tax restriction and annual reconciliation issues.

This refers to routine compliance (recurring) work and includes the following:

• Review of previous year’s tax matters for follow-up issues;
• Review of draft accounts and tax computations for inclusion in the audited accounts;
• Clearing tax review points with audit team and yourselves;
• Preparation of the annual income tax computation;
• Completion and submission of the self-assessment return to KRA;
• Computation and submission of the tax instalments to the KRA;
• Advising you of balance of tax payments and forwarding payment cheques to KRA; and
• Dealing with any clarifications or routine matters relating to the tax computation.

Transfer pricing is increasingly becoming a material risk for taxpayers with related party transactions. It has also become an area of focus for revenue authorities across the world. Our service transfer pricing service offerings include:

Local, regional and global transfer pricing documentation;

Handling transfer pricing audits and reviews;

• Business model restructuring;
• Advance pricing arrangement (“APA”);
• Debt pricing; and
• Transfer pricing training.

Strategic tax planning is driven by the recognition of the fact that every business decision has a tax consequence. Decisions relating to expansion of business in the region, new processes, new contractual obligation always introduce a tax risk or a tax planning opportunity.

Our approach is to have quarterly meetings with the top management to familiarise ourselves with the management business plans. From these meetings, we will be able to identify any tax planning opportunities or conversely identify potential tax risks to the organisation. The meetings however should not be the only forum in which issues are raised – as and when requested, we will analyse any proposed transaction to determine the most tax efficient way of structuring such transactions. We also envisage that there will be regular interactions between us and the management of the companies in the group so that they can ask any questions on regular operational tax issues.
Other tax services that we can perform on request include;

Industry wide lobby of industry specific issues;

• Major tax consultancy and projects and other special assignments on tax issues
• that would require extensive research, consultations and preparation of a report such as
  International tax planning, Expatriate tax services; and
  Customs consultancy services e.g. application for duty exemption.
• Obtaining PIN certificates for staff;
• Checking and submission of end of year PAYE returns;