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Income Tax Act - Guidelines on Allowability of Bad Debts

Legal Notice 37 of 2011

This is the latest version of this Legal Notice.
Income Tax Act - Guidelines on Allowability of Bad Debts
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Legal Notice 37 of 2011
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Income Tax Act
Date
Language
English
Type
Legal Notice
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LAWS OF KENYA

INCOME TAX ACT

INCOME TAX ACT - GUIDELINES ON ALLOWABILITY OF BAD DEBTS

LEGAL NOTICE 37 OF 2011

  • Published in Kenya Gazette Vol. CXIII—No. 36 on 21 April 2011
  • Commenced on 21 April 2011
  1. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]
1. A debt shall be considered to have become bad if it is proved to the satisfaction of the Commissioner to have become uncollectable after all reasonable steps have been taken to collect it.2. A debt shall be deemed to have become uncollectable under paragraph (1) where -
(a)the creditor loses the contractual right that comprises the debt through a court order;
(b)no form of security or collateral is realisable whether partially or in full;
(c)the securities or collateral have been realized but the proceeds fail to cover the entire debt;
(d)the debtor is adjudged insolvent or bankrupt by a court of law;
(e)the costs of recovering the debt exceeds the debt itself; or
(f)efforts to collect the debt are abandoned for another reasonable cause.
3. A bad debt shall be a deductible expense only if it is wholly and exclusively incurred in the normal course of business.4. For the purposes of these guidelines, a bad debt which is of a capital nature shall not be an allowable expense.
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History of this document

31 December 2022 this version
21 April 2011
Commenced
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