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Deductions

Deductions Allowed & Dis-Allowed

Deductions Allowed(Sec15-ITA)

  • Expenditure wholly and exclusively incurred in the production of income.
  • Bad debts which the Commissioner considers to have become bad & doubtful debts.
  • Deductions under the Second Schedule and  Ninth Schedule.
  • Capital expenditure in prevention of soil erosion.
  • Capital expenditure on legal costs and stamp duties in acquisition of a lease.
  • Structural alterations to the premises necessary to maintain the existing rent.
  • Expenditure, other than above before the date of commencement of a business.
  • Diminution in value of any implement, utensil or similar article.
  • Gains from the sale of, or the grant of the right to fell, standing timber.
  • Capital expenditure on clearing land & planting thereon permanent or semi-permanent crops.
  • Expenditure on scientific research-Capital or not.
  • Contributions by an employer to a national provident fund or other retirement benefits scheme.
  • Expenditure on advertising in connection with a business.
  • One-third of the total gains & profits from employment of a non-citizen individual.
  • Expenditure incurred by the lessee in the case of a lease.
  • Cash donation to a charitable organization registered or exempt from registration.
  • Capital expenditure in construction of a public school, hospital, road or social infrastructure.
  • Capital expenditure in purchase or acquisition of an indefeasible right to use a fibre optic cable.
  • Expenditure incurred by a person sponsoring sports.
  • Donations to the Kenya Red Cross, county gvts or national disasters mgt institutions.
  • Interest paid and wholly and exclusively employed in the production of investment income.
  • Interest <Ksh300,000 money borrowed applied to on premises for residential purposes.
  • Share of any loss incurred by the partnership.
  • Loss realized in computing, in accordance with paragraph 5(2), of the Eighth Schedule,
  • Medical expenses or medical insurance cover incurred for the benefit of the proprietor.
  • Business deficit allowable in succeeding years of income.


Deductions Not Allowed (Sec16-ITA)

  • Expenditure or loss not wholly and exclusively incurred for business.
  • Capital expenditure, or any loss, diminution or exhaustion of capital.
  • Maintenance of self or family: ie.
    • Expenses other than for meals or accommodation  incurred on business trips.
    • Vacation trip expenses except.....
    • Educational fees of employee's dependents or relatives.
    • Club fees including entrance and subscription fees except...
  • Expenditure or loss which is recoverable under any insurance, contract, or indemnity.
  • Income tax or tax of a similar nature, including compensating tax paid.
  • Interest payments for thinly capitalized companies(3:1) controlled by non-resident.(2:1) 
  • Contributions to a registered/unregistered pension, savings, or provident scheme....
  • Premium paid under an annuity contract.
  • Expenditure incurred under s-10 ITA by non-resident person not having a permanent establishment within Kenya;
  • Loss incurred in a business which, having regard to the nature of the business.
  • Expenditure under contract of hiring of a road vehicle other than a commercial vehicle.
  • Gross interest paid/payable in excess of 30% of EBITD&A of the borrower.
  • Deemed interest where the person is controlled by a non-resident person.

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