Presumptive tax is a tax regime for small businesses whose annual turnover does not exceed Ksh 5 million. It is payable at the time of obtaining or renewing a business permit or trade license from the county government. This guide outlines the process and requirements for paying presumptive tax in Kenya.
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Persons Liable to Pay Presumptive Tax in Kenya
- Resident persons whose gross turnover from business does not exceed Ksh 5 million in a year.
- Those issued or liable to be issued with a business permit or trade license by a county government.
Exceptions
Presumptive tax does not apply to:
- A person whose income is exempt under the First Schedule of the Income Tax Act and has a valid exemption certificate.
- A person who opts out of the regime by notifying the KRA Commissioner in writing.
- A person whose gross turnover exceeds Ksh 5 million per year.
- Income derived from management, professional services, rental business, or incorporated companies.
Presumptive Tax Rate
The rate is 15% of the amount payable for a business permit or trade license issued by the county government.
How to Pay Presumptive Tax in Kenya
- Log in to iTax:
- Access your KRA iTax account using your credentials.
- Click on “Payment Registration”:
- Choose the option for Presumptive Tax.
- Fill in the required details:
- Complete the form with the necessary information, such as your business permit details.
- Generate a Payment Registration Number (PRN):
- On iTax, generate a PRN under the Presumptive Tax Payment section.
- Pay via Mpesa or partner bank:
- For Mpesa, use Paybill Number 572572.
- Enter the PRN as the account number.
- You can also pay through any other partner bank.
Penalty for Late Payment
- A 5% penalty on the tax due.
- An additional late payment interest of 1% per month, as per the Tax Procedures Act, 2015.
This process allows small businesses to comply with Kenya’s tax laws efficiently, and it ensures timely payment while avoiding penalties.
