Reading the Tax Laws (Amendment) Act 2024: A Board Level Briefing
Signed in December 2024, the Act reshaped several rules that touch software payments, minimum tax, and filing deadlines. Here is what boards need to track.
By Mdawida LLP Tax Team
Key takeaways
- The Act took effect on 27 December 2024.
- Software payments now sit more clearly inside the royalty and withholding tax net.
- Subsidiaries of large international groups should test their minimum tax position.
After a turbulent budget season, Kenya moved much of its revenue agenda into the Tax Laws (Amendment) Act 2024, which was signed into law on 11 December 2024 and took effect on 27 December 2024. For directors, the value is in knowing which changes alter the numbers and which alter the calendar.
Software payments and withholding tax
The definition of royalty was widened to capture payments for software, including licences, development, training, maintenance, and support. For any business that pays overseas vendors for software, this raises a direct question about withholding tax that did not always arise before.
Boards should ask management for a list of cross border software and technology payments and a clear position on how each is treated. The cost of getting this wrong tends to surface in a later KRA review, with interest and penalties attached.
Minimum tax for large groups
A new minimum top up tax targets members of large multinational groups, in line with the global move toward a floor on effective tax rates. If a group sits above the international turnover threshold and its effective rate in Kenya falls below the minimum, a top up may apply.
Most owner managed businesses are outside this net, but subsidiaries of international groups should confirm their position early rather than assume it.
The quieter administrative changes
Some of the most useful changes are procedural. Where a deadline is stated in days, weekends and public holidays can be excluded from the count, which gives a little more room than the old reading allowed. It is a small point, but it removes a common source of avoidable late filing penalties.
This article is general guidance, not specific professional advice. Tax law and reporting standards change, and your situation is unique. Speak with us before acting on anything here.
