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Value Added Tax

Republic of Burundi

DetailsDescription
VAT registration threshold Gross Turnover FBU 100,000,000 (approximately US$ 82,000)
Tax rates
  • 18% standard rate
  • 10% on imported food products and agricultural processed goods transformed in Burundi and agricultural inputs
  • 0% on exports and international transport
Recovery of input VAT (VAT inputs deduction) Recovery of VAT on some items:
  • inputs related to non-taxables activities
  • inputs on transport, restaurant and hotel accommodation services, entertainment services if not supplied in course of business.
Classification of supplies Supplies are classified as either taxable or exempt
Due date for filling of VAT returns and payment of VAT due Not later than the 15th day of the month following the month in which the taxable supplies were made
VAT remission procedures The VAT law does not provide for refund of tax paid before remission is granted. Application for remission must be made prior to purchase.
The approved application are delivered to OBR by the applicant. At OBR, the documents are verified based on the decision of the minister for remission.
Categories of exempt and zero rated supplies Burundi specify the exempt activities
Burundi specifies that agricultural and livestock products are VAT exempt when sold by owners and not withstanding turnover thresholds
Burundi’s exemption covers pharmaceuticals in addition to the services
Burundi exempts only international travel
Burundi exempts army services rendered by social organisations
When it comes to zero rating of goods and services, all EAC countries’ exports fall in this category
Taxation of imported services There is reverse charge on imported services
Partial apportionment There is apportionment rules determined based on the exempted sales to the total sales
VAT refunds and refund processes
  • Refund of VAT is done by the financial administration on fund exclusively created for reimbursement of tax credits;
  • VAT is refunded by cheque after clearance of tax debts by the taxpayer;
  • Application for refund of tax credit is addressed to the tax authority the latest on 15th of the months following the financial year or quarter;
  • Refund within 90 days from the application. Failure to refund within that period, a penalty of 1% per month of delay will be paid.

 

Republic of Kenya

DetailsDescription
VAT registration threshold Gross Turnover KShs 5m per annum
Tax rates 16% or 0%
Recovery of input VAT Recovery of VAT on some items e.g. passenger cars, repairs and maintenance of passenger cars, restaurant and hotel accommodation services, entertainment services if not supplied in course of business.
Classification of supplies Supplies are classified as either taxable or exempt
Due date for filling of VAT returns and payment of VAT due The return should be filed on or before 20th day following the month end.
Any tax liability to be made on or before 20th day following the month end.
VAT remission procedures Remission is not applicable.
Categories of exempt and zero rated supplies The supplies which are exempt and zero-rated are listed in the First and Second Schedules of the VAT Act, 2013. All other supplies are now taxable at the standard rate of 16%.
Further, the list of public bodies, privileged persons and institutions with zero rated status has are also listed in the Second Schedule.
Taxation of imported services If a service is imported by a registered person, a registered person shall be deemed to have made a taxable supply to himself and shall account for the tax as follows:
  1. A registered person will get credit for an amount of input tax proportionate to the supply that’s entitled to input tax credit.
  2. Where a full input tax credit is payable on the imported service, the value of the taxable services shall be reduced to zero.
Partial apportionment Input tax relating to making of partly taxable supplies and partly other uses is determined as follows:
  • deductible in full, if taxable supplies are more than 90% of the total supplies
  • not deductible, if taxable supplies are less than 10% of the total supplies
  • apportioned for deduction when 90% > taxable supplies as a percentage of total supplies < 10%
VAT refunds and refund processes Where excess input over output is due to making zero rated supplies, then VAT refund is due and should be lodged within 12 months period.

 

Republic of Rwanda

DetailsDescription
VAT registration threshold Gross Turnover Rwf 20,000,000 (approximately US$ 34,500)
Tax rates 18% and 0%
Recovery of input VAT Input VAT incurred is restricted to the extent that the supply or importation is acquired in making taxable supplies.
Classification of supplies Supplies are classified as either taxable or exempt.
Due date for filling of VAT returns and payment of VAT due Within fifteen (15) days after the end of the period of the value added tax, a registered taxpayer must submit value added tax declaration, in accordance with forms and formalities determined by the Commissioner General. For less than two hundred million Rwandan francs (Rwf 200,000,000), the value added tax declaration is quarterly and shall be submitted with payment of the tax due within fifteen (15) days after the end of the quarter. However, taxpayers whose annual turnover is equal to or less than two hundred million Rwandan francs (Rwf 200,000,000) who wish to register
VAT remission procedures N/A
Categories of exempt and zero rated supplies Two lists are provided under Article One: Zero-rated goods and services, and Article2: Exempted goods and services
Partial apportionment There is apportionment rules determined based on the exempted sales to the total sales
VAT refunds and refund processes If, during a particular prescribed taxation period, the input tax exceeds output tax, the Commissioner General shall refund the supplier the due amount to which the supplier stands in credit by reason of the excess, on receipt of the relevant tax return document within thirty (30) days:
  • 1% after one day from the expiry of the prescribed period for tax declaration;
  • 2% after receipt of proof of the last outstanding tax declaration. However, the value added tax paid by registered investors shall be refunded within a period not exceeding fifteen (15) days after receipt by the Revenue Authority of the relevant application.

Prior to payment, the Commissioner General may order for verification of the claim for refund.

 

United Republic of Tanzania

DetailsDescription
VAT registration threshold Gross Turnover TShs 40m per annum
Tax rates 18% or 0%
Recovery of input VAT This is restricted on taxable supplies. Some services such as insurance are exempt and input incurred in respect of these services is not claimable.
Classification of supplies Supplies are classified as either taxable or goods with special relief.
Due date for filling of VAT returns and payment of VAT due Monthly VAT returns and any payments are due on the last working day of following month.
For VAT on the importation of goods, the due date is when customs duty is payable.
VAT remission procedures  
Categories of exempt and zero rated supplies Entities entitled to special relief either pay VAT at 10% or benefit from full relief
Taxation of imported services Reverse VAT is applicable.
Partial apportionment Applicable where the input VAT is incurred in making a composite supply, hence the need to apportion.
VAT refunds and refund processes Standard: Six months after the due date of the tax returns on which the refund became due or the submission of the last VAT returns for that six month period, whichever is later.
“Regular repayment” :Businesses in a constant refund position may apply for authorisation to lodge claims on a monthly basis.

 

Republic of Uganda

DetailsDescription
VAT registration threshold Gross Turnover UShs 50m per annum
Tax rates 18% or 0%
Recovery of input VAT Restricted to taxable supplies only.
Classification of supplies Supplies are classified as either taxable or exempt.
Due date for filling of VAT returns and payment of VAT due 15th day of the next month
Categories of exempt and zero rated supplies Specified in the first and second schedule of the Act.
Taxation of imported services Effective 1 July 2011, taxpayers were no longer required to prepare self-billed invoices in respect to imported services. Therefore, VAT accounted for on imported services is not claimable as input VAT.
Partial apportionment Applicable where the input VAT is incurred in making a composite supply, hence the need to apportion.
VAT refunds and refund processes Standard: Six months after the due date of the tax returns on which the refund became due or the submission of the last VAT returns for that six month period, whichever is later.
“Regular repayment”: Businesses in a constant refund position may apply for authorisation to lodge claims on a monthly basis.

Income tax - Capital Gains tax

Republic of Burundi

Tax on Capital GainsRate (%)
Capital gain resulting from sale or cession of immovable property

This is taxed together with business profits
N/A
Re-organisation means:
  1. A merger of two or more resident companies;
  2. The acquisition or takeover of more than 50% or more of shares or voting rights, by number or value, in a resident company in exchange for shares of purchasing company;
  3. The contribution of at least 50% of assets and liabilities of a resident company by another resident company solely in exchange of shares in the purchasing company;
  4. Splitting of a resident company into two or more resident companies
No tax on capital gains

 

Republic of Kenya

Tax on Capital GainsRate (%)
Capital Gains Tax is a tax chargeable on the whole of a gain which accrues to a company or an individual on or after 1st January, 2015 on the transfer of property situated in Kenya, whether or not the property was acquired before 1st January 2015.

Property is defined in the law (Eighth Schedule to the Income Tax Act). It includes land, buildings and marketable securities.

The tax is to be paid by the person (resident or non-resident) transferring the property, that is, the transferor. The transferor can either be an individual or a corporate body.

A transfer takes place:

  1. where a property is sold, exchanged, conveyed or disposed of in any manner (including by way of gift); or
  2. on the occasion of loss, destruction or extinction of property whether or not compensation is received; or
  3. on the abandonment, surrender, cancellation or forfeiture of, or the expiration of rights to property.


The loss may be carried forward to be offset / deducted against a gain of a similar nature (that is, a capital gain) at a future date.
5%
Certain transactions are exempted as follows:
  1. income that is taxed elsewhere as in the case of property dealers;
  2. issuance by a company of its own shares and debentures;
  3. transfer of machinery including motor vehicles;
  4. disposal of property for purpose of administering the estate of a deceased person;
  5. vesting of property in the hands of a liquidator or receiver;
  6. transfer of individual residence occupied by the transferor for at least three years before the transfer;
  7. compensation by Government for property acquired for infrastructure development;
  8. transfer of asset between spouses as part of divorce settlement;
  9. sale of land by an individual where the proceeds is less than KShs 30,000;
  10. sale of agricultural land by individuals outside gazetted townships where the property is less than 100 acres;
  11. Exchange of property necessitated by: incorporation, recapitalization, acquisition, amalgamation, separation, dissolution or similar restructuring involving one or more companies which is certified by the Cabinet Secretary to have been done in the public interest;
  12. transfer of investment shares by a body exempted under Paragraph 10 of the First Schedule;
  13. transfer of investment shares by retirement benefits scheme registered with Commissioner.
No tax on capital gains

 

Republic of Rwanda

Tax on Capital GainsRate (%)
Capital gain resulting from sale or cession of commercial immovable property 30%
Capital gain on secondary market transaction on listed security. However in case of corporate reorganisation, the transferring company is exempt from tax in respect of capital gains and losses realised on reorganisation. Exempt
Re-organisation means:
  1. A merger of two or more resident companies;
  2. The acquisition or takeover of more than 50% or more of shares or voting rights, by number or value, in a resident company in exchange for shares of purchasing company;
  3. The contribution of 50% or more of assets and liabilities of a resident company by another resident company solely in exchange of shares in the purchasing company;
  4. Splitting of a resident company into two or more resident companies
 

 

United Republic of Tanzania

Disposal of investmentTanzania AssetOverseas Asset
  % %
Individual:
Resident 10 30
Non-resident 20 N/A
Company:
Resident 30 30
Non-resident 30 N/A
Exemptions
  1. Private Residence - Gains of TShs 15m or less
  2. Agricultural land - Market value of less than TShs 10m
  3. Units in an approved collective investment scheme
  4. Shares:
    • DSE shares held by resident
    • Shares held by non-resident with shareholding of less than 25%

 

Republic of Uganda

Tax on Capital GainsRate (%)
Capital gains accrued prior to 1 April 1998 are not taxable 30
Chargeable assets:
Non depreciable business assets 30
No capital gains on private assets 30
Gains arising from sale of shares in a private limited company - this applies even though such shares are not business assets (e.g for individuals) 30
Chargeable gain:
Disposal proceeds less cost base. Cost base is defined as the amount paid or incurred by the taxpayer in respect of the asset including incidental expenditure of a capital nature incurred in acquiring the asset and includes any consideration in kind given for the asset. In the case of any asset acquired prior to 31 March 1998, the cost base is the indexed cost or the market value as at 31 March 1998 determined using a pre-determined formula. 30

Income tax - Transfer pricing

Republic of Burundi

Currently there are no transfer pricing regulations

 

 

Republic of Kenya

The Income Tax Act requires transactions between resident companies and their related non-residents to be at arm’s length.

 

The Minister for Finance in the 2006 budget introduced the Income Tax (Transfer Pricing) Rules.

 

The Finance Act 2012 enacted provisions to give effect to Tax Information Exchange Agreements (TIEA) which the Kenyan government intends to enter with other governments.

 

 

Republic of Rwanda

The Rwandan law on direct taxes on income stipulates that where conditions are made or imposed between related persons carrying out their commercial relationship which differ from those which would be applied between independent persons, the Commissioner General, may direct that the income of one or more of those related persons be adjusted to include profits that would have been made if they operated as independent persons.

 

The tax legislation empowers Commissioner General to make arrangements in advance with persons carrying out business with related persons to ensure efficient application of the Transfer Pricing provision.

 

 

United Republic of Tanzania

The Income Tax Act 2004 contains a provision which deals with transfer pricing.

 

The provision refers to the arm’s length principle, a requirement which applies not only to transactions with non-resident associates but also to transactions with resident associates.

 

 

Republic of Uganda

Transfer pricing regulations apply effective 1 July 2011. The regulations are modelled on the OECD Model Tax Convention.

 

Businesses in Uganda are now required to determine their income and expenditures arising from transactions with related parties in a manner that reflects the arms’ length principle.

 

Income tax - Withholding tax

Republic of Burundi

GeneralRate
Dividends 15%
Interests 15%
Royalties 30%
Service fees including management and technical service fees 30%
Lottery and other gambling proceeds 15%
Study, financial, accounting and technical assistance 15%
Acquisition of movable and immovable property from non-resident to a resident person 5%
WHT on public tenders 4%
WHT on imports 3%

 

Republic of Kenya

GeneralResidentNon-Resident
  % %
Dividend >12.5% voting power Exempt 10
Dividend <12.5% voting power 5 10
Interest:
Bearer instruments 25 25
Government bearer bonds 2yrs or more 15 15
Other interest (other than qualifying) 15 15
Qualifying Interest:
Housing bonds 10 N/A
Bearer instruments 20 N/A
Other 15 N/A
Royalty 5 20
Management & professional fees 5 20
Consultancy fees - Citizens of East African Community   15
Training (including incidental costs) 5 20
Contractual fee 3 20
Winnings from betting and gaming 20 20
Rent / Leasing Immovable N/A 30
Other N/A 15
Appearances e.g. an entertainment, sporting including organising N/A 20
Pension / retirement annuity Applicable bands depending on circumstances 5
Insurance Commission:
Brokers 5 20
Others 10 20

 

Republic of Rwanda

GeneralResidentNon-Resident
  % %
Dividends 15 15
Interests 15 15
Royalties 15 N/A
Service fees including management and technical service fees 15 N/A
Performance payments made to an artist, musician or an athlete irrespective of mode of irrespective of mode of payment 15 N/A
Lottery and other gambling proceeds 15 N/A
Goods supplied by companies or physical persons not registered in tax administration 15 N/A
Goods imported for commercial use is payable at the customs on the CIF (cost, insurance and freight) value before the goods are released by customs 5 N/A

 

United Republic of Tanzania

GeneralResidentNon-Resident
  % %
Dividend:
to company controlling 25% or more 5 10
from DSE listed company 5 5
otherwise 10 10
Interest 10 10
Rent:
land and buildings 10 15
aircraft lease 10 0
other assets 0 15
Royalty 15 15
Natural resource payment 15 15
Service fees 5 15
Technical services to mining companies 5 15
Insurance premium 0 5
Commission on mobile phone money transfer 10 N/A
Payments to resident persons without a TIN certificate 2 N/A
Payments for goods by the Government of Tanzania 2 N/A

 

Republic of Uganda

GeneralResidentNon-Resident
  % %
Dividend:
To company controlling 25% or more 0 15
From companies listed on the Ugandan Securities Exchange to individuals 10 15
Others 15 15
Interest 15 15
Interest from government securities 20 15
Repatriated branch profits N/A 15
Payment by a Government institution, local authority, Company controlled by Government, or by a designated person 6 N/A
Public entertainers, sports persons N/A 15
Contractors or professionals 6 15
Importation of goods into Uganda 6 6
Rent N/A 15
Management charge N/A 15
Natural resource payment N/A 15
Royalty N/A 15
Ship, air or road transport operator 6 2
Transmitting messages by cable, radio, optical fiber, satellite communication or internet connectivity 6 55
Petroleum sub-contractor N/A 15

Income tax - Individuals

Burundi

RefBand of annual taxable incomeTaxable incomeTaxTax on BandsCumulative tax on income
  FBU FBU % FBU FBU
First 0-150,000 150,000 0 0 0
Next 150,001-300,000 150,000 20 30,000 30,000
Over 300,001   30    

N/B: This is also applicable to non-residents

 

Kenya

RefBand of annual taxable incomeTaxable incomeTaxTax on BandsCumulative tax on income
  KShs KShs % KShs KShs
First 10,164 10,164 10 1,016 1,016
Next 9,576 19,740 15 1,436 2,452
Next 9,576 29,316 20 1,915 3,351
Next 9,576 38,892 25 2,394 4,368
Over 38,892   30   6,762

N/B: This is also applicable to non-residents

 

Rwanda

RefBand of annual taxable incomeTaxable incomeTaxTax on BandsCumulative tax on income
  Rwf Rwf % Rwf Rwf
First 0-30,000 30,000 0 - -
Next 30,000-100,000 70,000 20 14,000 14,000
Over 100,000   30    

N/B: This is also applicable to non-residents

 

United Republic of Tanzania

RefBand of annual taxable incomeTaxable incomeTaxTax on BandsCumulative tax on income
  TShs TShs % TShs TShs
First 170,000 170,000 0 - -
Next 190,000 360,000 13 24,700 24,700
Next 180,000 540,000 20 36,000 60,700
Next 180,000 720,000 25 45,000 105,700
Over 720,000   30    

The above rates apply in Mainland Tanzania. The Government of Zanzibar has separate powers to determine personal income tax rates applicable in Zanzibar and therefore the rates in Zanzibar may differ from those in Mainland Tanzania.

 

Uganda

i) Resident individual rate - monthly

RefBand of annual taxable incomeTaxable incomeTaxTax on BandsCumulative tax on income
  UShs UShs % UShs UShs
First 235,000 235,000 0 0 0
Next 100,000 335,000 10 10,000 10,000
Next 75,000 410,000 20 15,000 25,000
Over 410,000   30 plus 25,000*    

*(a) UShs 25,000 plus 30% of the amount by which chargeable income exceeds UShs 410,000 and

(b) Where chargeable income of an individual exceeds UShs 10,000,000 an additional 10% charged on the amount by which chargeable income exceeds UShs 10,000,000

 

ii) Non-Resident individual rate - monthly

RefBand of annual taxable incomeTaxable incomeTaxTax on BandsCumulative tax on income
  UShs UShs % UShs UShs
First 335,000 335,000 10 33,500 33,500
Next 75,000 410,000 20 15,000 48,500
Over 410,000   30 plus 48,500*    

*(a) UShs 48,500 plus 30% of the amount by which chargeable income exceeds UShs 410,000 and

(b) Where chargeable income of an individual exceeds UShs 10,000,000 an additional 10% charged on the amount by which chargeable income exceeds UShs 10,000,000


East African Community
EAC Close
Afrika Mashariki Road
P.O. Box 1096
Arusha
United Republic of Tanzania

Tel: +255 (0)27 216 2100
Fax: +255 (0)27 216 2190
Email: eac@eachq.org