6 Types of Kenyan Business Taxes Payable in 2026 (KRA Guide)

Tax season in Kenya is rarely anyone's favourite time of year, but in 2026 the rules of the game have changed. The migration to eTIMS, tighter Kenya Revenue Authority (KRA) enforcement and stiffer penalties mean Kenyan businesses can no longer afford guesswork. This guide breaks down the six core Kenyan business taxes you must pay in 2026, the current rates, filing deadlines and what eTIMS now requires from every business, VAT-registered or not.

Whether you run a sole proprietorship in Eldoret, a limited company in Nairobi or a multinational subsidiary in Mombasa, getting tax right is now a survival skill. KRA's iTax and eTIMS systems have closed most loopholes, and the cost of non-compliance, in penalties, lost tenders and reputational damage, is higher than ever.

Why Tax Compliance Matters More Than Ever in 2026

Two reforms have permanently changed the Kenyan tax landscape since this blog was first written. First, the rollout of electronic Tax Invoice Management System (eTIMS) has made every invoice traceable in near real time. Second, KRA can now disallow expenses that lack a valid eTIMS invoice when computing taxable income, which directly hits your corporation tax bill. Tax compliance is now an operational discipline, not an annual scramble.

A clean tax record also unlocks tangible business benefits: a valid Tax Compliance Certificate (TCC) is required to bid for government and most large private tenders, to apply for many trade licenses, and to repatriate dividends. You apply for it on the KRA iTax portal.

The 6 Core Business Taxes in Kenya for 2026

1. Corporation Tax

Corporation tax is charged on the taxable profits of limited liability companies. Per KRA, the 2026 rates are:

• Resident companies: 30 percent of taxable profit.
• Branch of a non-resident company: 37.5 percent of taxable profit.
• Newly listed companies on the NSE: reduced rates may apply for a transitional period, subject to current Finance Act provisions.

Annual returns are due by the end of the sixth month after the company's year-end (30 June for December year-ends). Instalment tax is payable in four equal instalments through the year.

2. Value Added Tax (VAT)

VAT is charged on taxable goods and services supplied in or imported into Kenya. The standard rate is 16 percent, with a reduced 8 percent rate on petroleum products and 0 percent on zero-rated supplies such as exports.

• Registration threshold: KES 5 million in taxable turnover per year. Below that, registration is voluntary.
• Filing: Monthly via iTax by the 20th of the following month.
• eTIMS: Input VAT can only be claimed if the supplier has issued a valid eTIMS invoice.

3. Pay As You Earn (PAYE)

PAYE is the tax deducted from employee salaries each month. Employers must register, deduct, remit and file by the 9th of the following month. The 2026 PAYE bands are progressive, starting at 10 percent and rising to 35 percent for higher incomes, in line with the Finance Act bands. Employers must also remit the Affordable Housing Levy and SHIF/NSSF contributions alongside PAYE.

4. Withholding Tax (WHT)

Withholding tax is deducted at source on specific payments such as professional fees, consultancy, dividends, interest, royalties and rent. Common 2026 WHT rates include:

• Professional or management fees to residents: 5 percent.
• Professional fees to non-residents: 20 percent.
• Dividends to non-residents: 15 percent.
• Royalties to non-residents: 20 percent.
• Digital service tax/SEP-related payments: per latest Finance Act schedule.

Remit by the 20th of the following month using a withholding certificate generated on iTax.

5. Excise Duty

Excise duty is charged on specified goods and services produced in or imported into Kenya. With eTIMS now enforced, excisable transactions must flow through electronic invoices. Common excisable items include:

• Bottled water, juices and soft drinks
• Alcoholic beverages and tobacco
• Cosmetics and beauty preparations
• Mobile cellular phone services and airtime
• Money transfer and digital lending fees
• Imported motor vehicles

Rates and inflation adjustments are reviewed annually. Excise returns are due by the 20th of the following month.

6. Turnover Tax (TOT)

Turnover Tax is a simplified tax for micro and small businesses. As of 2026, TOT applies to resident businesses with annual gross turnover between KES 1 million and KES 25 million. The rate is 3 percent of gross monthly sales per current KRA guidance, payable by the 20th of the following month. Businesses below KES 1 million in annual turnover are exempt; those above KES 25 million graduate to standard income tax and, where applicable, VAT.

The eTIMS Mandate: What Every Business Must Do

eTIMS is no longer optional. KRA now requires that every person carrying on business in Kenya issues electronic tax invoices through eTIMS, including businesses that are not registered for VAT. KRA launched eTIMS Lite specifically for non-VAT taxpayers so that landlords, freelancers and small traders can comply without buying ETR hardware.

• Onboarding: Register on the eTIMS portal and choose a client type (online, mobile, taxpayer portal or system-to-system).
• Invoice generation: Every sale, including cash sales, must produce an eTIMS-validated invoice.
• Buyer impact: If you receive an invoice without an eTIMS code, you cannot claim the related VAT input or, in most cases, the expense for income tax.

Key Filing Deadlines at a Glance

1. PAYE, NSSF, SHIF, Housing Levy: 9th of the following month.
2. VAT, Excise, Withholding Tax, TOT: 20th of the following month.
3. Instalment tax: 20th day of the 4th, 6th, 9th and 12th month of the accounting period.
4. Annual income tax return: By 30 June for December year-ends; otherwise 6 months after year-end.
5. Annual personal income tax return: 30 June.

Penalties for Non-Compliance

KRA penalties bite. Late filing of corporation tax returns attracts a penalty of 5 percent of the tax due or KES 20,000, whichever is higher. Late VAT filing attracts 5 percent of the tax due or KES 10,000. Interest at 1 percent per month also accrues on unpaid tax. Combined, these can rapidly overwhelm a small business's cash flow.

How Communication Tools Can Help You Stay Compliant

Tax compliance is largely a discipline of reminders, reconciliations and customer communication. Businesses use HelloDuty to send automated SMS reminders for outstanding invoices, run SMS for business communication in Kenya campaigns, and field tax-related queries through AI receptionists. Customers can also reach KRA-style information via eTIMS USSD access.

Frequently Asked Questions

What is the corporation tax rate in Kenya for 2026?

30 percent for resident companies and 37.5 percent for branches of non-resident companies, per current KRA guidance.

What is the VAT registration threshold in Kenya?

KES 5 million in annual taxable turnover. Voluntary registration is allowed below that.

Do non-VAT businesses need to use eTIMS?

Yes. KRA now requires all businesses to issue electronic invoices via eTIMS, with eTIMS Lite available for non-VAT taxpayers.

What is the Turnover Tax rate and threshold?

3 percent of gross monthly sales for resident businesses with annual turnover between KES 1 million and KES 25 million.

When are PAYE and VAT due?

PAYE by the 9th and VAT by the 20th of the following month, via iTax.

Stay Compliant, Stay Connected

Kenyan business taxes in 2026 are stricter, more digital and less forgiving than ever, but they are also more predictable when you understand the six core taxes above. Build a monthly compliance rhythm around eTIMS invoicing, payroll cut-offs and iTax filings, and use modern communication tools to keep customers, suppliers and the taxman in sync. Talk to HelloDuty about SMS, voice and AI tools that automate the customer side of compliance so your finance team can focus on the numbers.