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How to Pay Presumptive Tax in Kenya

Updated on February 25, 2019
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Patrick, a computer technician, is a dedicated writer who wishes to make the world better by informing individuals who seek more knowledge.

How to Pay Presumptive Tax in Kenya

It is now mandatory for small business traders in Kenya to pay Presumptive Tax. The tax is to be paid;

  • Before applying for renewal of single business permits from the respective county
  • Or before applying for new permits for new businesses.

This tax is friendly to the business community and it should be supported by all. However, the business community needs to be educated and shown the importance of paying this tax. At the moment there is a lot of grumbling, people saying that the taxes they pay is not being used properly. This tax has come to replace the Turnover Tax which was being filled quarterly. This article will try to help you pay for the tax properly without many hustles. Before we do so, let’s have a look at the basics or what you need to know about this tax.

Presumptive Tax

Presumptive Tax Screen
Presumptive Tax Screen | Source

What Is Presumptive Tax?

This is a tax to be paid by a Kenyan resident and a business person whose yearly income or turnover from the business they are running does not exceed Five Million Kenya Shillings (5,000,000). This means that, for example, if your business income is Three Million Kenya Shillings in a year, you are liable to pay this tax. Those whose income in a given year is over Five Million Kenya Shillings should apply and pay for VAT which is filled on monthly basis.

Payment Registration

Payment Registration
Payment Registration | Source

Who Should Pay This Tax?

These are the business persons who are liable to pay a Presumptive Tax in Kenya;

a) Any resident business persons whose annual gross turnover from the business does not exceed Kenya Shillings 5 million.

b) Any business persons who are already issued or are liable to be issued with a trade license or business permit by a County Government.

Those Exempted from Paying Presumptive Tax

These are some of the instances where you will not be subjected to this tax:

a) Any Kenyan business person whose business income is exempted from taxation. This is under the stipulations found on the First Schedule of Income Tax Act. The business person must have a valid exemption certificate.

b) Any business person who is supposed to pay tax under normal circumstances but request in writing to the Commissioner to be exempted from paying the tax.

c) A resident business person whose gross turnover or the annual earnings from the business for the financial year exceeds five million Kenya Shillings.

d) Any income obtained from -

  1. Management and professional services; or
  2. Companies that are formed by incorporation; or
  3. People running a rental business

Tax Rate That Has Been Set

The government of Kenya has set the presumptive tax rate to be easy for individual business people to calculate. You do not require an accountant to work out the maths for you. It is a simple 15% of the total amount payable for your business permit that issued by the County Government. This shall be a final tax meaning that it should not be included in the submission of annual returns.

When Is Presumptive Tax Due?

This tax is supposed to be paid before paying for your business permit or when you are renewing the same. Thus you should pay for the tax and then pay for the renewal of your license. This means the tax will be payable once a year.

Filing of Returns

The Taxpayers under Presumptive Tax Regime are not required to file a tax return on the income from the business that qualifies under this tax category.

How Do I Pay for This Tax?

As a taxpayer, you will have to log onto the iTax portal to make payment for this tax. You will be required to have your KRA pin Number and your iTax password. Once you log into the portal, you generate a Payment Registration Number (PRN) on iTax under Presumptive Tax Payment option. You will use the generated slip to make your payment which can be paid through any KRA partner bank or through M-Pesa Pay Bill Number 572572.

What Is the Penalty for Late Payment?

  • The penalty is 5% of the tax due
  • Interest - Interest for late payment is 1% per month as outlined in the Tax Procedures Act, 2015.

Do not wait to be penalized for not paying taxes. It is better to pay your taxes and on time.

Procedure of Paying the Presumptive Tax

  1. Using your KRA pin and password, log in to the iTax portal.
  2. Go to payments options and select payment registration.
  3. Click next and click okay when prompted if you want to proceed. The payment information page is displayed with some auto-populated information.
  4. Next, to the Tax Head, select income tax, select presumptive tax on the Tax Sub Head. For Payment Type, select self-assessment tax.
  5. Select payment registration unless you want to amend where you will select the payment amendment option.
  6. Fill in all the tax details indicated. These are the year, County, Sub County, Ward, Business License Registration Number, Business Name, Yearly Turnover, and Single Business Permit Payable Value.
  7. After entering all the above, the tax will be automatically calculated for you.
  8. Click on the add button. The details you have filled above will be auto-populated below the add button.
  9. Select the payment mode and click on the submit button.
  10. A payment slip will be generated whereby you have to click on where it is written click here to download.
  11. Make your payment either through the partner banks or M-Pesa paybill.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2019 Patrick Kamau

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