When calculating Kenyan taxable income, book depreciation is not allowed for deduction. Effective 1 January 2022, the use of declining balance method is abolished and the capital allowances are provided using the straight-line method.

Capital allowances are permitted at the following rates if the assets are used for business purposes:

Until 31 December 2021, capital allowances are allowed using the declining-balance method at the following rates:

Telecommunication equipment	10% (20% until 24 April 2020)
Computer and peripheral computer hardware and software	25% (20% until 24 April 2020)
Purchase or acquisition of an indefeasible or irrevocable right to use fiber optic cable	10% (5% until 24 April 2020)
Buildings used for manufacture, hotel buildings, hospital buildings and petroleum or gas storage facilities (effective 25 April 2020)	50% in the first year, 25% from subsequent years
Machinery used for manufacture, hospital equipment, ships or aircraft (effective 25 April 2020)	50% in the first year, 25% from subsequent years
Motor vehicles and heavy earth moving equipment; calculators, copiers, and duplicating machines (effective 25 April 2020)	25%
Filming equipment by a local film producer licensed by Cabinet secretary responsible for filming (effective 25 April 2020)	25%
Educational Buildings, including student hostels, and commercial buildings (effective 25 April 2020)	10%
Furniture and fittings (effective 25 April 2020)	10%
Other machinery (effective 25 April 2020)	10%

Mining Allowance

Effective 25 April 2020, a deduction of 50% can be claimed in the first year of use, followed by 25% per year on a declining balance for machinery used to undertake operations under a prospecting right and machinery used to undertake exploration operations under a mining right. Previously, companies engaged in mining in Kenya received a 100% capital allowance on machinery first used for undertaking operations under the mining rights. Effective 1 January 2022, the rates are unchanged but the capital allowance will be provided using the straight line method instead of the declining balance method.

Farm Works

Effective 25 April 2020, a deduction of 50% can be claimed in the first year of use, followed by 25% per year on reducing balance for farm works. Previously, capital investment in regard to farm work was fully deducted over a 5-year period on a straight-line basis (20% per year). Effective 1 January 2022, the rates are unchanged but the capital allowance will be provided using the straight line method instead of the declining balance method.

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