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Shortfall is the difference between the amount of dividend determined by the commissioner and the actual distribution mace by the company. The commissioner expects the companies to pay the following amounts as dividends to their shareholders.
- 40% of the I let Adjusted trading profit after Corporation Tax
- 100% oil all ether non trading types of incomes e.g. interests, dividends, rent etc. of the company after corporation tax
Under the following circumstances, the companies will be exempted from shortfall distribution tax
1. The company's authorized capital is fully issued and therefore it cannot obtain further fun.is from shareholders and can only rely on its internal reserves to finance its investments plans.
2. The company does not have any liquid funds
3. The company does have liquid funds but the company is reserving them to clear maturing obligations e.g. loans, mortgages or plans to purchase plant and machinery, building etc
4. The company is expanding its business and trading operations and requires additional commitment inventory,
5. The company has committed itself to purchase another business as long as the company to be purchased is not a company that is a source of raw materials or a distribution company for its products.
6. Any company controlled directly or indirectly by the government of Kenya
Wilfykil answered the question on February 25, 2019 at 10:34
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