Types of Taxes
There are two types of taxes in Kenya
They are remitted directly to the government as income tax.
These are charges that you pay when you buy goods and services and they include Value Added Tax (VAT), excise duty, and custom taxes
is Income Tax?
tax is a direct tax that is imposed on income derived from the following:
- Business income from any trade or profession
- Employment income
- Rent income
- Investment income
- Income from services rendered among others
- Pensions among others
How is Income tax collected?
Collection of income tax varies based on the companies’ sources of income.
These methods include:
- This is a form of Income Tax that is levied on corporate
bodies such as Limited companies, Trusts, and Co-operatives, on their annual
- Companies that are based outside Kenya but operate in Kenya
or have a branch in Kenya pay also pay Corporation Tax on income accrued within
the rate of corporation tax is at 30%.
is a method of collecting tax from individuals in gainful employment.
or Profits includes wages, casual wages, salary, leave pay, sick pay, payment
in lieu of leave, fees, commission, bonus, gratuity,
or subsistence, travelling, entertainment or other allowance received in
respect of employment or services rendered.
you are an employer you are required to register for this obligation.
an employer you are required to deduct PAYE from your employees? salaries and
wages at the prevailing rates and remit the same to KRA on or before the 9th
of the following month.
- When a taxpayer
(trader) supplies and invoices an appointed withholding VAT Agent the payment
for supply is made less VAT charged or that which ought to have been charged
regardless of whether the supplier is registered for VAT or not.
- Withholding VAT is only
charged on taxable goods and services.
- No VAT is withheld on
exempt goods, exempt services and Zero rated supplies.
- Any VAT withheld in
exempt and Zero rated supplies is treated as tax paid in error and therefore
refundable by the Commissioner
is advance Tax?
is a tax paid in advance before a public service vehicle or commercial vehicle
is licensed or after the annual
are the tax rates for advance tax?
vans, pick-ups, trucks, prime movers, trailers and lorries; Kshs. 1,500
per ton of load capacity subject to a minimum of Kshs. 2,400 per year of
saloons, station-wagons, mini-buses, buses and coaches; Kshs. 60 per
passenger capacity per month subject to a minimum of Kshs. 2,400 per year
advance tax a final tax?
tax is not a final tax. Individuals who have paid any advance tax are required
to declare the same in their individual income tax returns.
Installment tax is paid by persons
who have tax payable for any year that amounts to Kshs. 40,000 and above
Residential Rental Income?
is tax payable by resident persons on residential rental income accrued or
derived in Kenya where the rent income is between Kshs. 144,000
and Kshs. 10 million per annum.
rate of tax is 10% on the gross rent received and is payable when landlords
receive rent from their tenants either monthly, quarterly, semi-annually or
annually. However, returns must be filed monthly.
expenses, losses or capital deduction allowances shall be allowed for deduction
from the gross rent.
What is Value Added Tax (VAT)?
Added Tax is charged on supply of taxable goods or services made or provided in
Kenya and on importation of taxable goods or services into Kenya.
you are registered for VAT you will be required to account for VAT charged on
your taxable supplies through online monthly returns and pay any VAT due.
is important to note that tax is due and payable when;
or services are supplied to the purchaser
invoice is issued in respect of the supply
is received for all or part of the supply
certificate is issued by an architect, surveyor or any person acting as
consultant or in a supervisory capacity in respect of the service (whichever is