Companies will be required to remit one percent of their gross turnover every month to the taxman whether or not they have posted a profit after enactment of Finance Act of 2020.
Further, they will remit the minimum tax if it is higher than installment tax – which is payable by companies with no tax losses.
Small-scale tea producers will lose more than Sh754 million annually after a new tax took effect on January 1, Kenya Tea Development Agency (KTDA) has warned urging for a review of the tariff.
Companies will be required to remit one percent of their gross turnover every month to the taxman whether or not they have posted a profit after the enactment of Finance Act of 2020.
Further, they will remit the minimum tax if it is higher than installment tax – which is payable by companies with no tax losses.
“With the tea sub-sector’s focus being the enhancement of the socio-economic welfare of the smallholder farmer, the new tax will erode farmers’ earnings and could therefore prove to be counterproductive to the cause,” said Mr Alfred Njagi, KTDA Management Services managing director.
Going by last year’s audited financial accounts, the levy means that KTDA-managed tea factories will on average pay over Sh62.8 million each month, in addition to the over 40 taxes and levies they are already remitting to various Government agencies.
KTDA factories recorded Sh79.02 billion turnover for the year ended June 30, 2020 and would need to remit over Sh799 million with the new tax regime.
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Note: The results are not exact but very close to the actual.