Dividends and Interest

Dividends:

Source:

• Dividend paid by a resident company to shareholder or any person related to that shareholder.

Taxable Dividends(Amounts):

• any cash or asset is distributed or transferred
• the shareholder is discharged from any obligation measurable in money
• the amount is used in any other manner for the benefit of the shareholder
• any debt owed by the shareholder is paid or settled by that company
• the amount represents additional taxable income or reduced assessed loss by virtue of any transaction with the shareholder
• Dividend received by a financial institution specified in the Fourth Schedule.*
• Dividend distributed out of untaxed gains or profits(Compensating tax at corporation tax rate)*. 

Exempted:

• Dividends received by resident CO. from a CO.in which it controls 12.5% or more of voting power. 

Rates:

• Qualifying dividends are charged at qualifying dividend rate of tax.(s.34(d))
• Qualifying interest are charged at qualifying interest rate of tax.(s.34(c))
• 
  

Interest Received

Exempted Interest include - Interest income from:

• Kenya under financial arrangements made or guaranteed by the EIB of the US;
• Cash flows passed to the investor in the form of asset-backed securities.
• All listed bonds, notes or other similar securities (with maturity of at least 3 years) used to raise funds for infrastructure, projects and assets defined under Green Bonds Standards and Guidelines, and other social services.
• Bonds issued by the EADB.
• Mining: ie- interest and investment incomes in respect of a rehabilitation fund.