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There are many accountancy firms in Nairobi and Mombasa, including affiliates of the global accountancy groups. Companies are required to appoint an auditor annually in accordance with Section 159 of the Kenyan Companies Act. The International Financial Reporting Standards (IFRS) were set out in 1998 to be the accounting standards in the country. From 1999, financial reports are mandated to be carried out in accordance with International Accounting Standards (IASs), for all enterprises, both listed and non-listed. Confirmation of the adoption of IFRS by both listed and non-listed companies was provided in the amendment of the Companies Act in 2002. However, observers have noted that there are some gaps between applicable accounting standards and actual accounting practices. In the World Economic Forum’s Global Competitiveness Report (2012-13) Kenya ranked 81st in the world (out of 144 countries) for the strength of its auditing and reporting standards, with a value of 4.4 out of 7, just below the world mean of 4.6. In the 2011 World Bank’s Ease of Doing Business Index the country placed 92nd for resolving insolvency.
The Institute of Chartered Certified Accountants of Kenya (ICPAK) is the professional body regulating and representing accountants in the country. It is a member institute of the East African Community Institutes of Accountants alongside Rwanda, Uganda, Tanzania and Burundi. Additionally, in 2011 ICPAK entered into a partnership with the Institute of Chartered Accountants of England and Wales in signing a Memorandum of Understanding that will enable greater recognition of Kenyan accountants in the United Kingdom and the wider network of ICAEW. Qualified accountants in Kenya are Certified Public Accountants (CPAs), who have passed the mandatory Certified Public Accountant Examination. The official examining body for CPAs is KASNEB. The Institute coordinates CPA certification for those wanting to qualify and work as professional accountants and auditors. To enter into training for professional accountancy requires the same minimum requirements for admission for a university degree course.
Personal income tax rates in Kenya are progressive, rising to 30% for incomes over 466,704 Kshs. General corporate income tax is charged at 30%, with branches of foreign companies taxed at 37.5%. There is a reduced rate for newly listed companies in the three to five years following the year of listing, with the rate, from 20-27%, and period dependant on the percentage of capital listed. Value added tax (VAT) is charged at a standard rate of 16%. There are some zero-rated supplies, including the export of goods and taxable services and the supply or import of specified goods. In the 2011 Ease of Doing Business Report Kenya ranked 166th in the world (out of 183 countries) for paying taxes, below most of its regional neighbours, such as Uganda in 93rd place, Tanzania in 129th and Ethiopia in 40th. In the Global Competitiveness Report (2012-13) the country placed 111th in the world, with a rate of 49.6%, compared to Uganda with 35.7% (63rd) and Tanzania with 45.5% (97th).