Amani Consulting Ltd., a Kenyan resident company, provides engineering and digital project-management services
in Kenya, Rwanda and Uganda. The following information relates to the year ended 31 December 2025:
| Particulars | Sh. |
| • Profit from Kenyan operations before foreign income and transfer pricing adjustment | 80,000,000 |
| • Profit attributable to a permanent establishment in Rwanda after deductible expenses | 16,000,000 |
| • Tax paid in Rwanda on the permanent establishment profit | 4,000,000 |
| • Gross technical service fees from an unrelated Ugandan customer | 12,000,000 |
| • Direct expenses incurred in earning the Ugandan technical service fees | 2,000,000 |
| • Withholding tax deducted in Uganda under the applicable DTA | 1,200,000 |
| • Arm’s length adjustment for undercharging a related non-resident distributor | 5,000,000 |
Additional information:
1. Amani Consulting Ltd. has no separate foreign subsidiary. All foreign income is earned directly by the Kenyan company.
2. The Rwanda permanent establishment profit is stated after deducting expenses wholly and exclusively incurred in Rwanda. Head office expenses already allocated to Rwanda should not be deducted again in Kenya.
3. Foreign tax credit is available only to the extent of Kenyan corporation tax attributable to the relevant foreign-source income.
4. The related non-resident distributor performs only routine marketing functions and the Commissioner has issued an arm’s length adjustment based on comparable independent margins.
7. The foreign tax credit should be computed separately for each source of foreign income and should not create a refund or be set off against Kenyan tax on purely Kenyan-source income.
6. Unless otherwise stated, all amounts are before Kenyan corporation tax. Amani Consulting Ltd. has no brought forward tax losses, unutilised foreign tax credits or capital allowance claims for the year.
5. The Ugandan technical service fees were earned without a fixed place of business or dependent agent in Uganda; only withholding tax was deducted at source under the applicable tax rules.
Required:
Compute the Kenyan taxable income, foreign tax credit and corporation tax payable by Amani Consulting Ltd.
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