How do I File and Pay my Taxes?
1. Pay As You Earn (PAYE)
PAYE is deducted monthly at the prevailing individual income tax rates, on or before 9th of the following month.
How do I file for PAYE?
PAYE returns are filed online via itax
Companies and Partnerships without PAYE to remit should file a NIL return via iTax.
How do I pay for PAYE?
After filing the PAYE return, generate a payment slip online via iTax and make payment at any of the KRA appointed banks.
2. Corporation Tax
What is the Corporation Tax rate?
- Resident Companies are taxed at a rate of 30%.
- Non-resident companies are taxed at a rate of 37.5%.
Some companies enjoy corporation tax incentives and exemptions.
How do I file for Corporation Tax?
Corporation Tax is filed online via iTax by filing an Income Tax Company Return (IT2C Form), on or before the sixth month after the end of an accounting period.
For instance: a company whose accounting period runs from 1 Jan - 31st Dec is allowed up to 30th June of the following year to file their Income Tax - Company Return. Filing after 6 months attracts a penalty.
The Return covers one fiscal year which is a period of 12 months within which the corporation chooses to make its financial statements.
How do I pay for Corporation Tax?
Generate a payment slip via iTax and make payment at any of the KRA appointed banks.
If the annual tax liability is projected to exceed Kshs. 40,000, then you should pay in installments via iTax. This is called Installment Tax.
Read about filing & paying Installment Tax below.
3. Installment Tax
Installment Tax is paid in advance at four equal installments. It is paid before the year of income is over and before the accounts of the business are prepared to establish the actual tax payable.
Installment tax is computed in either of the following ways;
- Prior year basis - Prior year tax payments are multiplied by one hundred and ten per cent.
- Current year basis - In this method, especially for new business or those who were in losses and turned to profitability, installment tax is determined by estimating the current year profit and tax payable thereon
The following persons are not required to pay instalment taxes;
- Individuals whose only income is from employment and PAYE has been deducted.
- Individual whose final liabilities or whose tax payable from other sources of income in a year is below Kshs. 40,000.
- Installment taxes are not payable by persons who are subject to Turnover Tax (TOT).
What is the rate of taxation for Installment Tax?
Schedule of Installment Tax payments:
- 25% by the 20th day of the 4th month.
- 25% by the 20th day of 6th month.
- 25% by the 20th day of 9th month.
- 25% by the 20th day of 12th month.
Installment Tax for companies in the Agricultural Sector
- 75% which is the first 3 installments, combined and paid by the 20th day of 9th month.
- 25% is paid by the 20th day of 12th month.
After the accounts of the business are prepared to establish the actual tax payable, any balance of tax payable should be paid on, or before, the last day of the 4th month following the end of year of income or the accounting period.
4. Withholding Tax
What is the rate of taxation for Withholding Tax?
Withholding Tax rates vary depending on the income, and whether the recipient of the income is resident or non?resident.
How do I pay withholding Tax?
Payment is done via iTax.
Generate a payment slip and present it, with the tax due, at any of the KRA appointed banks.
After successful payment of Withholding Tax, both the Withholder and Withholdee will receive a withholding certificate via email.
5. Advance Tax
Advance tax is paid before a public service vehicle or a commercial vehicle goes for annual inspection.
What is the rate of taxation for Advance Tax?
- For vans, pickups, trucks and lorries - whichever is higher between Kshs. 2, 400 and Kshs. 1, 500 per ton of load capacity per year.
- For saloons, station wagons, mini-buses, buses and coaches - whichever is higher between Kshs. 60 per passenger capacity per month and, Kshs. 2, 400 per year.
NOTE: Advance Tax is not a final tax. You are thus required to file the annual Income Tax return and pay any additional tax due.
6. Rental Income Tax
What is the rate of tax for Rental Income Tax?
Taxation of Rental Income depends on whether the property is residential or commercial purposes.
Residential Rental Income Tax.
It is taxed at 10% on the gross rent received and no expenses are allowed.
The tax should be filed monthly via iTax, on or before the 20th of the following month.
NOTE: Residential Rental Income Tax is a final tax. Therefore, you do not have to declare it on your annual Income Tax return.
Commercial Rental Income Tax
It is taxed at the respective annual income tax rates and filed through the annual Income Tax Returns, on or before the last day of the 6th month after the end of the accounting period (irrespective of the amount).
7. Value Added Tax (VAT)
What is the rate of taxation for VAT?
The two tax rates for VAT are:
- 16% - general rate of tax and is applicable to taxable goods and taxable services.
- 8% - On petroleum products except for Liquefied petroleum Gas
- 0% - applies to supplies or importation of goods and services that are of the description for the time being specified in the Second Schedule of the VAT Act, 2013.
How do I file for VAT?
VAT returns are filed online via iTax, on or before the 20th of the following month, by filling a VAT3 Return form.
How do I pay for VAT?
After filing your VAT returns online, generate a payment slip for any tax due and make payment to any of the KRA appointed banks or through any mobile money transfer platform.
8. Excise Duty
What is the rate of taxation for Excise Duty?
The rate varies depending on the goods and services as specified in the 1st Schedule of the Excise Act, 2015.
Types of Excise Duty
- Specific Duty Rate: This is where a specific amount of tax is charged per unit of measure on an excisable product e.g. Kshs. 120 per litre of spirit.
- Advalorem Duty Rate: This is where a percentage rate of duty charged on the value of an excisable product.
Excise duty on imports is charged on the sum of total Cost, Insurance and Freight (CIF) and amount of customs duty (if any) and;
For locally manufactured goods, it is charged on a specific unit of measure or advalorem rate is charged on the Ex-factory selling price excluding VAT (if any), cost of excise stamps (if any) and cost of returnable containers (if any).
How do I pay for Excise duty?
Excise Duty on import is paid at the port of entry.
Domestic Excise Duty should be paid by 20th day of the following month.
Generate a payment slip via iTax and present to any of the KRA appointed banks to make the payment.
9. Capital Gains Tax (CGT)
What is the rate of tax for Capital Gains Tax?
- 5% of the net gain (Net Gain is Sales Proceeds, less the Acquisition and Incidental cost) after sale of a land or building.
- 0% on marketable securities.
CGT is a final tax. Thus it is not subject to further taxation after payment of the 5% rate of tax.
When is Capital Gains Tax due?
CGT is due and payable on or before the date of lodgement of application documents for transfer of property at the lands office.
10. Agency Revenue
This is a type of payment that we collect on behalf of various revenue collection agencies in Kenya. There are;
- Stamp Duty
- Land Rent
- Widows & Children?s Pensions Fund
- Sugar Development Levy
- Betting and Gaming taxes
a) Stamp Duty
What is the rate of taxation for Stamp Duty?
Stamp Duty are payable to the government in different rates, depending of the nature of the instrument.
Non-payment of Stamp Duty results in;
- Invalidity of the relevant transaction.
- Agreement signed between the parties become null and void.
- Transaction becomes inadmissible evidence in a Court of Law.
When is Stamp Duty due?
The due date depends on where transaction documents were prepared.
- If prepared in Kenya - payment should within 30 days.
- If prepared abroad, and send for registration locally - payment should be within 30 days of receiving the documents.
How do I pay Stamp Duty?
- Present the legal instrument for assessment.
- Go to the KRA Website, itax and print the Payment slip.
- Make payment at a KRA appointed bank.
- Present the copies of Payment slip and banking slip for confirmation of payment.
- After confirmation present the legal instruments for franking.
- Collection of the franked documents ready to be presented for registration.
b) Betting and Pool Tax
What is the rate of taxation for Betting and Pool Tax?
The tax rate for Betting, Lottery, Gaming and Prize Competition taxes is 15%.
Withhold as tax on winnings is 20%.
How do I pay Betting and Pool Tax?
The tax is paid for on or before the 20th of the following month.
Generate a payment slip online via iTax which you will use to make the payment at any of the KRA appointed banks.