6 types of Kenyan Business Taxes payable
With the migration into the itax digital system, many businesses are yet to familiarize themselves with the many taxes collected by the KRA.
Tax season is not exactly the most enjoyable time of year for most Kenyan taxpayers. Even though tax season presents an opportunity for any taxpayer to reduce their tax burden by claiming various deductions and credits, the process is often arduous and uninviting.
However, taxes are a necessary part of life, and failing to file or pay your taxes can have negative consequences including penalties. In 2014 the Kenya Revenue Authority (KRA) fulfilled a great milestone in rolling out the itax portal which allows citizens to file their tax returns online which makes the process more easier.
Income Tax is charged on all income from resident or non-resident taxpayers every year. Income tax is collected from different institutions including businesses.
Businesses who have registered as a limited company are obliged to pay corporation tax which is a form of income tax. Corporate tax is charged on income acquired from business activities in a year.
Rental Income tax
Rental Income tax is charged on the rent that businesses collect from renting either commercial or residential properties. The rate at which rental income is charged is by 10% on gross rent received per month.
VAT is charged on goods or services that are offered in Kenya by companies or businesses whose annual revenue exceeds Ksh 5 million. VAT also applies on goods and services that have been imported into the country.
Companies and businesses whose annual revenue is below Ksh 5 million can register for VAT on a voluntary basis as they are not required to.
Visit our latest blog on Value Added Tax in Kenya to get a wider understanding of VAT.
Turnover Tax is charged on the gross sales of a business or company’s Income Tax. Turnover Tax is payable by residents whose annual gross turnover from a business is more than Ksh 1 million, not exceeding Ksh 50 million. Turnover tax does not apply to any business that generates less than Ksh 1 million gross annual sales. Read more about Turnover tax in our latest blog on what is turnover tax .
Excise duty is imposed on goods and services that are manufactured in Kenya or have been imported into the country by businesses. Some of these goods include:
As a business it is crucial to be tax compliant as it is a civic duty. Failure to do so is breaking the law and may result to charging of penalties. The taxes that businesses pay that are collected by KRA are to aid the government of Kenya to make the business environment conducive for business people and activities.
Business which are tax compliant have the option to apply for a Tax Compliance certificate (TCC) which is issued by KRA. A Tax Compliant Certificate is a document that shows proof of continued paid taxes from a business or individual. Businesses who have a TCC enjoy certain benefits such as ease of applying for certain government or private tenders. Businesses or Individuals can apply for a TCC at the itax portal .
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