The Public Benefits Organisations Act came into force on 14th May 2024 repealing the Non-Governmental Organizations Coordination Act (“NGO Act”) and creates a new legal, regulatory, and institutional framework for non-profit organisations doing public benefit work in Kenya.
We summarize below the tax incentives available for Public Benefits Organisations (PBOs) under the Public Benefits Organisations Act:
- Indirect government support in the form of—
(a) exemptions from—
(i) income tax on income received from membership subscriptions and any donations or grants;
(ii) income tax on income acquired from the active conduct of income producing activities if the income is wholly used to support the public benefit purposes for which the organization was established;
(iii) tax on interest and dividends on investments and gains earned on assets or the sale of assets;
(iv) stamp duty; and
(v) court fees.
(b) preferential treatment under value added tax (VAT), and customs duties in relation to imported goods or services that are used to further their public benefit purposes;
(c) incentives for donations by legal and natural persons;
(d) employment tax preferences and;
(e) special tax incentives for donations to form endowments, prudent investment policies, etc.
2. Provision of direct government financing for public benefit organizations that partner with the government, via budget subsidies, grants for specific purposes, and contracts to perform certain work.
3. Preferential treatment in public procurement procedures and bidding for contracts.
4. Provision of information to enable public benefit organizations to contribute effectively to the policy processes.
5. Access to training courses that are relevant to public benefit organizations and offered by government institutions.