• 1. Freight tax

Freight tax

Income tax: 2.5% of gross outward freight arising from the carriage of cargo, mail and passengers derived from international transport activities of non-residential shipowners and/or operators.

Transhipment cargo is not taxed.

Exemption Agreements

Residents of the following countries may benefit from double taxation agreements which reduce or waive the income tax on international transport activities

Country Tax rate Date of entry into force Effective date
Canada 1.1% 08/01/1987 01/01/1987
Denmark 1.25%    
 France1 0%
 01/11/2010 01/01/2011
Germany 0%    
India 0.9%    
 Iran 0%  13/07/2017  01/01/2018
 Korea, Republic of 0%  03/04/2017 01/01/2018
Norway 0.9%    
South Africa 1.25%
19/06/2015 01/01/2016
Sweden 0.9%    
 United Arab Emirates1 0%  22/02/2017 01/01/2018
United Kingdom 0%   01/01/1976
 Qatar 0%  25/06/2015 01/01/2016
Comprehensive treaty negotiations currently in progress
Ratified in Kenya
Mauritius   Signed 11/05/2012   
Signed but not ratified
India (Renegotiated)

Signed 11/07/2016  
Italy   Signed 15/10/1979  
Netherlands
Signed 22/07/2015  
Nigeria
   Signed 06/09/2013
 
Seychelles

Signed 19/03/2014  
Tanzania   Signed 31/03/1999  
Uganda   Signed 31/03/1999  
In the process of negotiation
Ethiopia      
Kuwait      
Sri Lanka      
Tanzania (Renegotiation)      
Thailand      
Turkey      
Uganda (Renegotiation)      

Remarks

(1) Profits shall be deemed to be an amount not exceeding 5% of the full amount received by the enterprise on the carriage of passengers or freight.

Gross outward freights: This includes all freight charges plus bunkering currency adjustment factors and all other surcharges for goods embarked in Kenya but excludes deferred rebates. It does not include any charges resulting solely from the transhipment of goods in Mombasa. The total figures will include all outward freight charges wherever payable.

Passenger fares: This amount will be total passenger fares for passengers embarking in Kenya whether prepaid in another country or paid in Kenya.

The Shipping Agents are appointed by the Commissioner of Income Tax as tax collection agents. They are required to levy and remit tax on freight and passage moneys on all vessels when they sail. Where an appointed tax collection agent fails to deduct or remit the tax to the Commissioner as is required, the collection agent is held responsible and is penalized as appropriate.

Shipping tax deducted is payable to the Commissioner of income tax within thirty (30) days of the vessels sailing date.

 

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