Diamond Trust Bank Kenya Ltd. · NSEKE:DTK
Diamond Trust Bank Kenya — Investor Presentation
51 slides from Diamond Trust Bank Kenya's investor presentation
Slide 1: Financial Literacy: Taxation for SME
in eu Africa Financial Literacy Taxation for SME Speakers In collaboration with o1B Bank with us. Bank on us. DIAMOND TRUST BANK Q (] fe) ne ae 4a 22 5) re ©) Zo Ww a 4 we arn ae) 2Zz < Or a5 wn mun r<
Slide 2: Caveat
RSM RSM in Eastern Africa Caveat This presentation has been prepared by RSM (Eastern Africa) Consulting Ltd, and the views are those of the firm, independent of its directors, employees and associates. This presentation is for general guidance, and does not constitute professional advice. Accordingl
Slide 3: Welcome remarks & Introduction
In collaboration with ) fe) SS = DIAMOND DTB | RSM a . Bank with us. Bank on us. in Eastern Africa Welcome remarks & Introduction
Slide 4: RSM countries
rao RSM 120 COUNTRIES
Slide 5: Technical Capabilities, Awards & Achievements
inEastern Africa RSM Technical Capabilities, Awards & Achievements The firm's full IFRS and IFRS for SMEs Specimen Financial Statements were adopted by ICPAK as the basis of its Illustrative Financial Statements. The firm was also involved in the development of the ICPAK audit manual and model audit
Slide 6: RSM partners and leadership
2 RSM inEastern Africa A ted LINA RATANSI BCom, PGDFM, FCPA (T), CPA (kK) Group CEO -Tanz; NIHLA MAZRUI ELVIS OGETO BBA, CPA (kK), CPA (T), FCCA BCom, CPA (K),FCCA Partner—Kenya Partner—Kenya KANIZ LADHA BA, PDip Finance, CPA(T) Partner - Tanzania MBA, BBA, CP, Partner - Kenya JILNA SHAH CTA (UK), F
Slide 7: Industries served
2 RSM inEastern Africa Non- governmental organisations Hospitality Realestate & construction Financial & Service industries Horticulture & floriculture Health & education Trading
Slide 8: Our Services
2 itt RSM 1 ws Our Services RSM Afri rica @ ASSURANCE @ TAX SERVICES @ STATUTORY AUDITS INCLUDING LISTED © CORPORATE AND PERSONAL TAX FILING (/) TRANSACTION ADVISORY COMPANIES AND COMPLIANCE SUPPORT @ © REVIEWS AND COMPILATION ENGAGEMENTS. HEALTH CHECKS AND TAX DUE DILIGENCE UTES SSeLESSSIS UTES o)
Slide 9: Navigating the tax landscape in Kenya as an SME
In collaboration with RSM Navigating the tax landscape in Kenya as an SME 19
Slide 10: Navigating the Tax Landscape in Kenya as an SME
me) oy inzasten NAVIGATING THE TAX LANDSCAPE IN KENYA AS AN SME Africa Navigating the tax landscape in Kenya as a Small and Medium Enterprise (SME) involves understanding various tax obligations and processes to ensure compliance. Below we provide a detailed guide; > Business Registration and KRA PI
Slide 11: Navigating the Tax Landscape in Kenya as an SME (continued)
ae) NAVIGATING THE TAX LANDSCAPE IN KENYA AS AN SME RSM “ara (CONTINUED) Turnover Tax (TOT) Value Added Tax (VAT) Pay As You Earn (PAYE) Withholding tax (WHT) Other considerations — DIAMOND i] TRUST BANK Bank with us. Bank on us. Who does it applies to? Businesses with an annual turnover between KES
Slide 12: Navigating the Tax Landscape in Kenya as an SME (cont'd)
ae) NAVIGATING THE TAX LANDSCAPE IN KENYA AS AN SME (CONT’D)'" Roy ingastern Filing Taxes on iTax The KRA iTax platform is used for: * Registration and filing returns (VAT, PAYE, TOT, Corporation Tax) * Generating payment slips * Tracking tax compliance status Tax Incentives for SMEs Kenya offers va
Slide 13: Employment Deductions
RSM Employment Deductions
Slide 14: National Social Security Fund (NSSF)
20 RSM neem NATIONAL SOCIAL SECURITY FUND (NSSF) Africa Enhanced NSSF year 2 contributions (Effective 1st February 2024) * Contributions to NSSF are pegged at 6% of gross pay subject to Upper Earning Limit (UEL) and this is also matched by the employer * The contributions are classified into two cat
Slide 15: NSSF Earnings Limits
• • Lower Earnings Limit Year Upper Earnings Limit (Kshs) (Kshs) 1 6,000 50% of NAE 2 7,000 1 times NAE 3 8,000 2 times NAE 4 9,000 3 times NAE Year 5 onwards Lower Earnings Limit 4 times NAE | 15
Slide 16: NSSF (cont'd)
nesen NATIONAL SOCIAL SECURITY FUND (NSSF) — (CONT’D) Africa Enhanced Year 3 deductions RSM * Public notice dated 12' January 2024 notified all employers on the increase of Year 2 contribution rates in accordance with NSSF Act, 2013. This took effect from February 2024. Enhanced year 3 contributions
Slide 17: NSSF (cont'd)
inEastern Africa NATIONAL SOCIAL SECURITY FUND (NSSF) — (CONT'D) RSM Conditions for opting out of Tier II A formal written request by employer to RBA at least six days before opting to contract-out Details of the Contracted-out scheme as RBA may require in order to ascertain that the contracted out
Slide 18: Frequently Asked Questions - NSSF
20 RSM Ree, FREQUENTLY ASKED QUESTIONS - NSSF Africa Would the enhanced NSSF rates affect allowable Yes. Employers needs to be aware of the effect pension limits for income tax computation of enhanced rates on the allowable Kshs. purposes? 20,000 per month pension contribution limit Which payroll mo
Slide 19: Social Health Insurance Fund (SHIF)
2p RSM neem SOCIAL HEALTH INSURANCE FUND (SHIF) Africa The Kenyan Government in an effort to overhaul the health sector and actualize the universal health coverage enacted Health sector related laws including Social Health Insurance Act, 2023, which established the Social Health Authority Fund (SHIF
Slide 20: SHIF (cont'd)
20 it fC RSM" SOCIAL HEALTH INSURANCE FUND (SHIF) — (CONT'D) RSM Africa Legal hurdles on the implementation of SHIF = On 30th September 2024 Okiya Omtatah and two others filed a petition in the High Court of Kenya seeking temporary orders to suspend the planned rollout of the SHIF programme = The pe
Slide 21: SHIF (cont'd)
20 "OSM nese SOCIAL HEALTH INSURANCE FUND (SHIF) — (CONT'D) Africa Registration requirements for SHIF = Employers are required to register with SHA effective 30" September 2024 = Employers registered under NHIF are required to validate their SHA details using NHIF login credentials = Every Kenyanis
Slide 22: SHIF (cont'd)
20 "OSM nesen SOCIAL HEALTH INSURANCE FUND (SHIF) — (CONT'D) Africa Draft Social Health Insurance (General) Regulations, 2023 * For proper implementation of the Act, the CS Health released The Social Health Insurance Regulations, 2024 to guide implementation of SHIF. * The Regulations sets the rate
Slide 23: Frequently Asked Questions - SHIF
20 RSM fete. FREQUENTLY ASKED QUESTIONS - SHIF Which payroll month will the new SHIF fall due? The rates are effective from Ft October 2024 Will contributions to SHIF qualify for insurance relief asis the case Contributions to NHIF qualify for insurance relief at 15% of with NHIF? contributions capp
Slide 24: Affordable Housing Levy (AHL)
20 it fC RSM" AFFORDABLE HOUSING LEVY (AHL) RSM Africa AHL is provided under Affordable Housing Act, 2024 ¢ FA, 2023 introduced an Affordable Housing Levy through an amendment to The Employment Act, 2007 with acommencement date of 1st July 2023 * Thelevy is set arate of 1.5% of gross monthly salary
Slide 25: Affordable Housing Levy (cont'd)
20 it fC RSM" AFFORDABLE HOUSING LEVY (AHL) — (CONT'D) RSM Africa Affordable Housing Act, 2024 ¢ AHL was initially introduced through Finance Act, 2023 through amendment to Employment Act, 2007 effective 15t July 2023 * This amendment was declared unconstitutional by the High Court * To remedy the s
Slide 26: Frequently Asked Questions - AHL
néasten FREQUENTLY ASKED QUESTIONS - AHL Africa Is there a relief for contributions to AHL Are entities with no employees required to submit AHL Are there any penalties for non-compliance DTB | DIAMOND TRUST BANK AHL relief is applicable for employee contributions at 15% up to amaximum of Kshs. 9,00
Slide 27: Impact of NSSF, SHIF and AHL on the Payroll
inEastern Africa Bank with us, Bank on us, IMPACT OF THE NSSF, SHIF AND AHL ON THE PAYROLL PERSON ABC INCOME FOR THE MONTH OF SEPTEMBER 2024 COMPUTATION USING ENHANCED NSSF & SHIF RATES Kshs Kshs Kshs Basic pay 35,000 75,000 150,000 NSSF (2,100) (2,160) (2,160) Taxable Income 32,900 72,840 147,840 G
Slide 28: Impact on the Payroll (cont'd)
inEastern Africa DTB | Bank with us, Bank on us, IMPACT OF THE NSSF, SHIF AND AHL ON THE PAYROLL (CONT'D) PERSON ABC INCOME FOR THE MONTH OF OCTOBER 2024 COMPUTATION USING ENHANCED NSSF & SHIF RATES DIAMOND Kshs Kshs Kshs Basic pay 35,000 75,000 150,000 NSSF (2,100) (2.160) (2,160) Taxable Income 32
Slide 29: Impact on the Payroll (cont'd)
2 itt RSM , RSM nzsem IMPACT OF THE NSSF, SHIF AND AHL ON THE PAYROLL (CONT'D) PERSON ABC INCOME FOR THE MONTH OF SEPTEMBER 2024 COMPUTATION USING ENHANCED NSSF & SHIF RATES Kshs Kshs Kshs Basic pay 500,000 1,000,000 2,000,000 NSSF (2,160) (2,160) (2,160) Taxable Income 497,840 997,840 1,997,840 Gro
Slide 30: Impact on the Payroll (cont'd)
2 itt RSM RSM 7 ’ nzsem IMPACT OF THE NSSF, SHIF AND AHL ON THE PAYROLL (CONT'D) PERSON ABC INCOME FOR THE MONTH OF OCTOBER 2024 COMPUTATION USING ENHANCED NSSF & SHIF RATES Kshs Kshs Kshs Basic pay 500,000 1,000,000 2,000,000 NSSF (2,160) (2,160) (2,160) Taxable Income 497,840 997,840 1,997,840 Gro
Slide 31: Electronic Transmission of Transactions
RSM (, O os E ») O-w ELECTRONIC TRANSMISSION OF TRANSACTIONS
Slide 32: Implementation of Electronic System to Record Transactions
20 ity RSM. IMPLEMENTATION OF ELECTRONIC SYSTEM TO RECORD RSM TRANSACTIONS * Effective 1st September 2023, S23A of TPA empowers the Commissioner to establish an electronic system to capture business transactions * Electronic Tax Invoice Management System (eTIMS) rolled out in February 2023 and enhan
Slide 33: Implementation of Electronic System (cont'd)
20 — RSM” IMPLEMENTATION OF ELECTRONIC SYSTEM TO RECORD RSM TRANSACTIONS (CONT'D) * Exemptions - emoluments, imports, investment allowances, interest, airline passenger ticketing and similar payments * The Commissioner may, by notice in the Gazette, provide additional exemptions to the above * All t
Slide 34: Auto Population of VAT Returns
20 RSM néasten AUTO POPULATION OF VAT RETURNS Africa ¢ Auto populated return filing system effective from January 2024 will enable taxpayers to download prefilled VAT returns, validate information provided and file the same oniTax ¢ Inan auto populated regime, taxpayers would not be able to claim in
Slide 35: Frequently Asked Questions - eTIMS
20 RSM néasten FREQUENTLY ASKED QUESTIONS - eTIMS Africa Have the Tax Procedures (Electronic Tax Not yet. KRA is following up These will come in to Invoice) Regulations, 2023 been with Treasury on this effect once Gazetted gazetted? Will supplies obtained from suppliers KRA will give guidance once _
Slide 36: Frequently Asked Questions - eTIMS (cont'd)
nesen FREQUENTLY ASKED QUESTIONS — eTIMS (CONT'D) Africa Most central and local Govt receipts especially on licences are not eTIMS compliant. Will these be allowable? How will disbursements be treated as these are usually for recoveries? Are exempt bodies, EPZ, SEZ and NPOs required to on-board onto
Slide 37: Frequently Asked Questions - eTIMS (cont'd)
nesen FREQUENTLY ASKED QUESTIONS — eTIMS (CONT'D) Africa Current status Way forward Consultation talks are ongoing with Will subscriptions to professional bodies be allowable for tax purposes? Will airtime given to staff be allowable for tax purposes? How will matatu fares & small-scale farmers be a
Slide 38: Frequently Asked Questions - eTIMS (cont'd)
20 "OSM nexen FREQUENTLY ASKED QUESTIONS — eTIMS (CONT'D) Africa Will donations to charitable The deductibility of donations under Donations allowable as organisations be allowable for tax $15(2)(w) is guided by the Income Tax guided by $15(2)(w) purposes as these would not be (Charitable Donations)
Slide 39: Frequently Asked Questions - eTIMS (cont'd)
20 "OSM nexen FREQUENTLY ASKED QUESTIONS — eTIMS (CONT'D) Africa For entities that used TNMM The mark-up invoice to be raised in Ensure that the invoice is method to reflect the mark-up on the correct period using available raised in the correct tax related party billings - How will information and
Slide 40: Key tax issues where SMEs tend to be non-compliant
In collaboration with RSM Key tax issues that most SMEs tend to be non-compliant | 40
Slide 41: KRA compliance checks overview
20 RSM inEastern Africa Over the years, KRA has been performing compliance checks on all businesses In the next few slides, we will present the items that businesses should look out for per tax head to ensure utmost compliance DTB )z" out 1 Bane 2 Bank with us. Bank on us.
Slide 42: Issues noted by KRA: Corporate income tax
2 RSM inEastern Africa Issues noted by KRA hat to be doing to minimize the impact Corporate income Tax Production reconciliation — Under this, KRA often ° Maintains this reconciliation for each year tries to make an expectation of the sales from the of production inflows and outflows of production.
Slide 43: Issues noted by KRA: Corporate income tax (cont'd)
2 itt RSM RSM inEastern Africa Issues noted by KRA What to be doing to minimize the impact Corporate income Tax Treatment of related party transactions - KRA * When dealing with related parties, ensure may treat long outstanding trade payables to a Transfer pricing policy is in place related parties
Slide 44: Issues noted by KRA: Withholding tax
2 itt RSM RSM inEastern Africa Issues noted by KRA What to be doing to minimize the impact Withholding tax WHT oninstallation fees - Entities that incur costs * Bekeenonhow the installation cost is on purchase and installation of machinery should accounted for in the face of the invoice to ensure WH
Slide 45: Issues noted by KRA: Pay As You Earn
inEastern Africa Pay As You Earn DTB | Bank with us. Bank on us. DIAMOND TRUST BANK | 45 Contract for Service Vs Contract of Service — Entities may hire consultants to work for them over a period of time under a contract for services. This may be construed to be a contract of service and KRA seek to
Slide 46: Pay As You Earn: Payroll vs Financial Reconciliation
20 — RSM RSM inEastern Africa Pay As You Earn Payroll Vs Financial Reconciliation —too oftenKRA * Ensure areconciliation between payroll takes the gross income declared in the payrolls and costs and Financial statements is compares this against the cost declared as per the maintained Financial state
Slide 47: Issues noted by KRA: Value added tax
2 Del RSM RSM inEastern Africa Issues noted by KRA What to be doing to minimize the impact Value added tax Sales reconciliation — KRA often picks the salesas * Ensure reconciliation of the sales of per Financial statement and compares this to the maintained sales as per the VAT3 returns. The varianc
Slide 48: Questions & Answers
In collaboration with Dt B DIAMOND [| TRUST BANK Bank with us. Bank on us. in Roe Africa We exist to instill confidence in a world of change. 6th largest global assurance, tax and consulting network 64,000 | 820 | 120 People worldwide Offices Countries One of the RSM team Questions & Answers t\
Slide 49: Caveat
RSM RSM in Eastern Africa Caveat This presentation has been prepared by RSM (Eastern Africa) Consulting Ltd, and the views are those of the firm, independent of its directors, employees and associates. This presentation is for general guidance, and does not constitute professional advice. Accordingl
Slide 50: Thank you
2n = in Eastern Africa In collaboration with a DIAMOND f TRUST 6th largest global assurance, tax and consulting network Bank with us. Bank on us ™ 64,000 820 | 1 20 . . People worldwide Offices Countries Thank you | 50
Slide 51: Connect with us
Connect with us DAR ES SALAAM Tel: +255 22 2137314/15 Email: info@tz.rsm-ea.com Website: www.rsm.global/tanzania NAIROBI Tel: +254 20 3614000/4451747/8/9 Mobile: +254 706 347950/772 786111 Email: info@ke.rsm-ea.com Website: www.rsm.global/kenya KAMPALA Tel: +256 414 342780/9 Email: info@ug.rsm-ea.co