The Finance Act 2018 brought an amendment to the Income Tax Act which introduced a tax on distribution of dividends from untaxed profits at resident corporate rate (30%). This took effect on January 1, 2019. However, this amendment has brought a lot of confusion in its interpretation on what untaxed incomes relates to.

To settle this confusion, Kenya Revenue Authority (KRA) has issued a public notice to clarify on the matter.

In the public notice, KRA stated that the tax does not apply to distribution of income as dividends where the income is:

• Received by a registered collective investment scheme;
• Dividend received by a resident company from a subsidiary, whether local or foreign;
• Previously subjected to capital gain tax provisions;
• Previously subjected to final tax.