Presumptive Tax in Kenya, how to pay for it.

The finance Bill 2018 introduced a Presumptive Tax Regime effective of 1 January 2019 to widen the tax base with the aim of collecting more revenues, especially from the informal sector. Business will be required to pay for this tax before they are issued trade permits or business license by the county governments. This is after the failure of the Turnover tax that was not very effective in collecting revue for the government.

In summary, this post will highlight:

• What is Presumptive Tax
• Who falls under the Presumptive Tax and the Exemptions
• When the Tax is due
• How to Pay for the Presumptive Tax
• Penalties and fines under the Presumptive Tax Regime

What is Presumptive Tax?

Presumptive Tax is tax payable by a business that have annual turnover falling below 5 million in a year. Its payable by the business that is issued with a trading license or permits by county governments.

The business that does not fall under the Presumptive Tax

Not all business with revenue below 5 million is to pay the presumptive tax, business that does not fall into the presumptive tax regime include;

1. Management and Professional services
2. Rental Business
3. Incorporated companies

Presumptive Tax Rate 

The presumptive tax shall be equal to 15% of the amount a business pays the county government to be issued with a trade permit or a license.

That tax is final and not required to be declared during the tax filing period.

Presumptive Tax Due Dates

The tax is due at the time of payment for a business permit or trade license or their renewal. At the issue of the license by the county government business that falls under the regime will be required to pay for the tax before being issued with the licenses.

How to Pay for Presumptive Tax

To make payment taxpayers will be log into their itax portal and generate a Payment Notification Number under presumptive Tax after which they can pay via M-pesa playbill Number 572572 or from any KRA partner Bank.

Penalties

Penalties for the presumptive tax is 5% of the tax dues and an interest of 1% per month for late payment.

Conclusion

The introduction of the presumptive tax will ensure the government collects more revenue especially as it seeks to deliver on the Big Four Agenda on Food Security, Affordable Housing, Manufacturing and Affordable Healthcare for all.

If you would like any assistance in Payment of Presumptive tax contact us we will be glad to help.