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How To Pay Presumptive Tax In Kenya

How To Pay Installment Tax In Kenya
How To Pay Installment Tax In Kenya

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.

Persons Liable to Pay Presumptive Tax in Kenya

  1. Resident persons whose gross turnover from business does not exceed Ksh 5 million in a year.
  2. 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:

  1. A person whose income is exempt under the First Schedule of the Income Tax Act and has a valid exemption certificate.
  2. A person who opts out of the regime by notifying the KRA Commissioner in writing.
  3. A person whose gross turnover exceeds Ksh 5 million per year.
  4. 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

  1. Log in to iTax:
    • Access your KRA iTax account using your credentials.
  2. Click on “Payment Registration”:
    • Choose the option for Presumptive Tax.
  3. Fill in the required details:
    • Complete the form with the necessary information, such as your business permit details.
  4. Generate a Payment Registration Number (PRN):
    • On iTax, generate a PRN under the Presumptive Tax Payment section.
  5. 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.

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