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iHub By Editor / July 19, 2012

Techpreneurs, Let’s Talk Tax


Every business should always ensure that all its legal aspects are up to form, and for IT businesses, this is no exception. Many struggle with aspects such as what kind of company to register and what tax obligations their companies will face.

Last week Friday, associates from Mboya & Wangongu & Waiyaki Advocates law firm   gave a legal and tax advice talk to members of the iHub.

Tax Advice: iHub Members Listen Keenly

Among the important issues discussed were:

Legal Structure

Firms could take the form of different legal structures – from sole proprietorship, trade names to joint ventures and partnerships. Ultimately, forming a limited company offered the most advantages for fund raising, creditor protection, and flexibility to grow.

Commercial agreements

These could include management, service agreements and intellectual property agreements which should be simple as possible even as they captured elements like the objectives, duration, and confidentially of business arrangements.

They said that an increasingly preferred method of solving business disputed was through arbitration.

Ownership of Software

The team also  answered various questions posed including on ownership of software developed (copyrights usually belong to the person/company that commissions the work)  and about escrow agents who store software codes for companies that enter into agreements.

They noted that as a business grows, its obligations in terms of taxation also grows and it’s important to understand and pay taxes such as corporate tax, payroll tax, valued added tax (VAT) and withholding tax on time and in the right amounts.

This it to avoid stiff penalties for late payment or non-payment of taxes which can range from 20% on outstanding corporate tax, to 3 years imprisonment for falsifying ETR data

Dealing with K.R.A

Finally, they advised that if an officer from Kenya Revenue Authority(KRA) visits you or wants to do an audit, you should engage a tax professional, be ‘economical’ with documentation, co-operate and negotiate.


Author : Editor

Editor's Picks from Guest bloggers and contributor's from the tech community. We're always on the look out for contributors on ICT and tech for the region. For more information on guest blogging please email

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