I want to start a import and retail bussiness of automobile spareparts
Question: what is the system of taxation both for import and retail business for this type of investment?
There are two types of importation:
The New spare parts
The Used Spare parts
For both New and Used Spare parts, you have to pay for the following:-
a) Register for VAT
b) Pay 6% withholding tax (When you submit your accounts you offset what you were charged as withholding tax).
c) Import duty of 18%
For New Spare parts:-
In addition to the above, you have to pay:-
a) Domestic VAT which is 15% of 18%
For The Retail Business of automobile spare parts, the following Taxes apply:-
i) Income tax at the end of each year.
This rate changes according to the size of business.
From 0-50million shillings, this is considered small business, and therefore small business rates apply known as presumptive rates.
From Shs 5,000,000-20,000,000 (Shs 100,000 is paid per year)
From Shs 20,000,000-30,000,000 (1% of import tax or shs 350,000 which ever is lesser is paid per year)
From Shs 40,000,000- 50,000,000 ( 1% 0f import tax or Shs 450,000 which ever is lesser is paid per year)
For all Employees in the Business
All Employees who earn a salary above Shs 130,000 will have to pay P.A.Y.E (Pay As You Earn)
The computation will be as follows:-
From 0-Shs130,000 Tax Nil
From Shs 130,000-235,000, a tax of 10% will be charged on any amount above Shs 130,000.
From Shs 235,000-410,000, a tax of 20% will be charged on any amount above Shs 235,000 plus Shs 10,500.
From Shs 410,000 and above, a tax of 30% will be charged on any amount above Shs 410,000 plus Shs 45,000.