Background

Non-Profit Organizations (NPOs) are required to comply with Accounting Standards and Financial Reporting requirements including those imposed by donors. In addition, even though most are donor funded and therefore may be exempt from income tax, they are also required to comply with Kenyan Tax Laws. These compliance requirements may not be straightforward and in the past have presented challenges to some of the organizations. In addition, tax laws are dynamic, and taxpayers face the challenge of keeping abreast with them while applying the same to their operations in an equally dynamic economic environment. 

In this 2nd edition of the NPO seminar, we will share insights on selected accounting, financial reporting, and tax areas that concern NPOs in terms of their application and provide updates on recent changes. We will also highlight the economic outlook for Kenya and East Africa, and how this could affect the operations of NPOs.

Course objectives

By the end of the seminar, we endeavour to:

• Empower our audience with information and clarify controversy and uncertainty, thereby assisting them in enhancing compliance. 
  

Seminar Content

The topics to be covered during this seminar will include:

1. Economic Outlook for East Africa and how this may affect the operations of NPOs: 
   • Discussion on Kenya’s macroeconomic outlook. 
   • The role of NPOs in Kenya’s economic growth.
   • Factors that would have the most material impact on NPOs.
2.  Financial operations for NPOs:
   • Financial management and reporting for multiple funding partners and Sub-recipients.
   • Audit preparedness.
   • Focus on Internal controls and risk management around Procurement; and Managing fraud.
3. Financial Reporting for NPOs including: 
   • Donor reporting requirements.
   • Financial reporting frameworks in use, IFRS, IFRS for SMEs, IPSAS and special purpose framework; and Donor reporting frameworks.
   • Changes introduced through the PBO Act, 2024
4. The Corporate Income tax exemption process including common challenges experienced when undertaking this process.
5. Withholding tax obligations to be considered by NPOs including:  
   • The obligation to withhold and the services that are subject to withholding tax.
   • Highlights of court rulings on withholding tax that may affect NPOs.
6. Review of employment taxes including:
   • A discussion on the taxation of employment benefits including non-cash benefits.
   • Income tax exemptions applicable to employees. 
   • A review of the differences between employee and independent consultants and the tax implications of engaging each.    
   • Focus on the taxation of pension contributions.     
   • Emerging issues affecting payroll operations.
7. Value Added Tax(VAT) considerations for NPOs including:
   • Exemptions on social welfare activities.
   • A review of different income sources of NPOs and determination of the applicability of VAT.
   • Reverse VAT on services and its applicability to NPOs; and     
   • VAT on Country Agreements on purchases.
8. Customs compliance including:
   • Exemptions from import duty.
   • discussion on the valuation process for donations/grants.
9. A focus on some areas of controversy and how to navigate such
   controversies with the Kenya Revenue Authority (KRA). 
10. Governance and Data Protection