Kenya Revenue Authority (KRA) has scaled up its efforts in sensitizing Kenyans on their tax obligations. It has also been noted that the knowledge gap among taxpayers has contributed to their low tax morale. As a result, this  has a direct impact on compliance; taxpayers who are more educated about taxes are more likely to comply.

What is Individual Income Tax?

Individual income tax is a tax levied on the wages, salaries, dividends, interest, and other income a person earns throughout the year within the country in which the income is derived from.

Who should pay Individual Income Tax?

This tax applies to both Residents & Non-Residents;

1. On the income earned in respect to employment or any other services rendered in Kenya.
2. Also taxed on any other income that has accrued in or is derived from Kenya.

The individual income tax rates are highlighted here

How to file Individual Income Tax?

Every Individual who has an active KRA PIN is obliged by law to file their Income tax returns on or before 30^th June of every year.

However, if one has no income to declare for that particular period they are still required to file a nil return. All the submissions are done online via the iTax portal.

Is there a tax relief?

Yes, the tax relief is an incentive that reduces the amount of tax that a person has to pay. It is only applicable to resident individuals .Non-residents are not entitled to any tax relief.

A resident individual is entitled to a personal relief of Ksh. 28,800 per annum (Kshs.2, 400 per month)

There is also an insurance relief of 15% of the amount of premiums paid for self, spouse or child. However, it shall not exceed Ksh. 60,000 per annum.

How to pay Individual Income Tax?

Filing is not the final process for income tax if you have any tax due. After filing one should generate a payment slip that is to be presented to any of KRA’s appointed bank in order to pay the tax due. Payments are also accepted via Mpesa through the pay bill number 572572.

Penalty for late filing and payment

For individuals who default of filing their income tax returns on time they are bound to penalties of up to 5% on the tax due or Kshs.2000. Avoid penalties by filing your 2021 Income Tax returns before 30^th June 2022

Voluntary Tax Disclosure Programme

Are you worried about the penalties and fines that stem from your non-compliance? In case you have previously undisclosed income and are willing to set your records straight, you can apply for Voluntary Tax Disclosure Programme.  Under the programme you will disclose tax liabilities that were previously undisclosed for the purpose of being granted a relief on penalties and interest on the tax disclosed.

Where disclosure and payment is made between 1^st January, 2022 and 31^st December, 2022, there is a 50% remission on penalties and interest.