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The Kenya Revenue Authority (KRA) recently issued a Public Notice regarding the implementation of the Income Tax (Charitable Organisations and Donations Exemption) Rules, 2024. These rules, which took effect on 18th June 2024, provide guidelines on income tax exemptions for charitable organizations and the conditions for the deductibility of donations under Kenya’s tax laws.

In this article, we break down the new rules and their impact on NGOs, charities, and donors.

Key Highlights of the New Income Tax Rules
1️⃣ Tax Exemption Applications Must Meet New Compliance Rules

Any new applications for income tax exemption made after the effective date (18th June 2024) must adhere to the revised eligibility criteria outlined in the Rules.
Organizations seeking exemptions should ensure they meet the KRA’s detailed compliance requirements to avoid delays or rejection.
2️⃣ Existing Exemptions Require Renewal by June 2025

Charitable organizations that already had exemptions before the new rules came into force must comply with the new requirements by 18th June 2025.
This one-year transition period allows previously exempt NGOs and charities to align with the new compliance framework to maintain their tax-exempt status.
Failure to comply by the deadline may lead to revocation of the exemption under Rule 20.
3️⃣ Impact on Deductibility of Donations

Donations made to charitable organizations will only be tax-deductible if the recipient organization is fully compliant with the new rules.
This aims to increase transparency and prevent abuse of donation tax deductions.
Companies and individuals making donations should verify that the organization they are donating to has a valid tax-exempt status under the new framework.
Implications for Charitable Organisations and Donors
🔹 For NGOs & Charities:

If your organization previously had an exemption, take action before June 2025 to meet compliance requirements.
Ensure proper documentation to avoid tax exemption revocation.
Maintain accurate financial records and submit reports as required by KRA.
🔹 For Donors & Businesses:

Before making donations, confirm if the organization is compliant with the new tax rules to ensure your contribution is tax-deductible.
Work with tax professionals to maximize donation benefits while staying compliant.

How Zalma & Associates Can Help
At Zalma & Associates, we specialize in:
✅ Tax Advisory for NGOs & Charities – Helping you comply with the new exemption rules.
✅ Audit & Compliance – Ensuring proper documentation to maintain tax-exempt status.
✅ Donor Tax Planning – Assisting businesses and individuals in structuring donations for maximum tax benefits.

📧 info@zalmaassociates.co.ke | 📱 +254 721 790 366

💼 Stay Compliant, Stay Tax Smart! 🚀