Elements of Taxation glossary

The party first liable pushes the cost backward instead, squeezing a lower price out of their own supplier.

Taught in Taxation concepts and regulations

A company is resident in Kenya if it is incorporated under Kenyan law, or if its management and control were exercised in Kenya in the year of income.

Taught in Taxation concepts and regulations

How much is owed, and when, and how it must be paid, should be spelled out clearly rather than left open to arbitrary interpretation.

Taught in Taxation concepts and regulations

Paying should fit naturally into the taxpayer's own routine, PAYE taken straight off pay at source is exactly this principle built into the system's design.

Taught in Taxation concepts and regulations

Climbs with income too, but the climb flattens out past a certain point, effectively progressive only up to that threshold and behaving close to a flat rate beyond it.

Taught in Taxation concepts and regulations

Charged straight on the income or wealth of the person meant to carry it, with no route to pass the burden on elsewhere, income tax and capital gains tax both work this way.

Taught in Taxation concepts and regulations

Government is better served drawing revenue from several different sources than leaning too heavily on any single one.

Taught in Taxation concepts and regulations

Whatever it costs government to actually collect a tax should stay small next to what that tax brings in.

Taught in Taxation concepts and regulations

Revenue should grow naturally as the wider economy grows, without Parliament having to legislate a brand-new tax every time.

Taught in Taxation concepts and regulations

Taxpayers facing similar circumstances should carry a similar load (the horizontal strand), and someone with more capacity to pay should be asked to carry more (the vertical strand).

Taught in Taxation concepts and regulations

Comes down mainly to the relative price elasticity of demand and supply for the good involved: the more inelastic demand is compared with supply, the more of the tax a seller can push forward onto the buyer, and the relationship reverses the other way round.

Taught in Taxation concepts and regulations

The system needs to be adjustable at reasonably short notice as economic conditions shift.

Taught in Taxation concepts and regulations

The party first liable pushes the cost of the tax onward to the buyer, folded into a higher price.

Taught in Taxation concepts and regulations

Charged on a transaction rather than on income directly, which is exactly what lets it be passed on, wholly or in part, to someone else via the price, the pattern VAT, excise and customs duty all follow.

Taught in Taxation concepts and regulations

Resident if they have a permanent home in Kenya and were present at any time during the year; or have no permanent home but were present for 183 days or more in the year; or were present for an average of more than 122 days a year in that year and each of the two preceding years.

Taught in Taxation concepts and regulations

A stronger audit and investigation capacity, cross-checking a taxpayer's declared figures against third-party data, making ordinary compliance simpler, raising penalties, investing in taxpayer education, and deploying technology, iTax and the Electronic Tax Register (see the chapter on administration of income tax) among them, that leaves a transaction with far less room to hide.

Taught in Taxation concepts and regulations

The name the syllabus still uses for the statutory health-cover deduction, which now takes the form of a Social Health Insurance Fund (SHIF) contribution, currently 2.75% of gross pay, under the Social Health Insurance Act.

Taught in Taxation concepts and regulations

A mandatory retirement contribution to the National Social Security Fund, split between employer and employee; a compulsory deduction, but not itself a tax.

Taught in Taxation concepts and regulations

The income tax an employer withholds directly from an employee's own taxable pay, computed against the graduated bands currently in force and remitted straight to KRA.

Taught in Taxation concepts and regulations

The revenue a tax brings in should be worth the administrative effort of actually collecting it.

Taught in Taxation concepts and regulations

Climbs as the taxable amount climbs, so someone earning more hands over a bigger slice of it, the shape Kenya's individual PAYE bands follow.

Taught in Taxation concepts and regulations

Stays fixed at one rate no matter how large the amount taxed, the shape Kenya's standard corporate tax rate takes.

Taught in Taxation concepts and regulations

Falls as the taxable amount rises, so it actually costs a lower earner a bigger share of their income, the effect a flat charge on a daily necessity has once measured against income.

Taught in Taxation concepts and regulations

An ordinary taxpayer should be able to understand and follow the rule without needing specialist help just to comply.

Taught in Taxation concepts and regulations

The broad economic footprint a tax leaves, on prices charged, on behaviour, and on how income ends up distributed across the population.

Taught in Taxation concepts and regulations

Where the tax first lands, on whichever party is legally obligated to hand it over to the authority in the first place.

Taught in Taxation concepts and regulations

Where the tax actually ends up resting once any shifting (see Tax shifting, below) has run its course; it only coincides with impact when the tax genuinely cannot be passed on.

Taught in Taxation concepts and regulations

The deliberately illegal end of reducing a tax bill: understating income earned, inflating claimed expenses, simply not registering or filing at all, smuggling goods across the border, and issuing invoices that do not reflect a genuine transaction.

Taught in Taxation concepts and regulations