An employer is required to deduct PAYE from the employees’ salaries at the current rates and remit them to the Tax Authority on or before 9th of the following month.
How to Calculate PAYE
Tax Bands
Annual
Monthly
Rates
First
Kshs. 288,000
Kshs. 24,000
10%
Next
Kshs. 100,000
Kshs. 8,333
25%
On all income in excess of;
Kshs. 388,100
Kshs. 32,333
30%
Personal Relief of Kshs. 28,800 per annum (Kshs. 2,400 per month)
How to file for late filing and paying of PAYE
Date: File returns on or before the 9th of the following month
Penalty for late filing of PAYE: Whichever is higher, 25% of the tax due or Kshs. 10,000
Penalty on late payment of PAYE: 5% of the tax due and a late payment of 1% per month on the unpaid tax until the tax is paid in full.
0% – Zero rates supplies. Goods listed in the 2nd Schedule to the VAT Act. E.g. Exportation of goods/services, goods supplied to EPZ, privileged persons and public bodies e.t.c.
8% – Petroleum oils
16% – General rates for other goods and services
Date of filing: On or before 20th of the following month.
Penalty on late filing of VAT: Whichever is higher between, Kshs. 10,000 and 5% of the tax due.
Penalty on late Payment of VAT: 5% of the tax due and a late payment interest of 1% per month on the unpaid tax until the tax is paid in full.
Instalment Tax
This is an estimated Instalment Tax paid periodically at 4(four) equal installments before the year of income ends and before the preparation of the business accounts to establish actual tax payable.
How to file Instalment Tax:
Installments are spread evenly at 25% and payable on the 20th day of the 4th, 6th, 9th and 12th months of the year of income for all taxpayers except those in the Agricultural Sector.
While taxpayers in the Agricultural Sector pay in installments of 75% in the 9th month and 25% in the 12th month.
NB: Return balances are to be paid at the end of the 4th month after the year-end i.e. by 30th April of the following year for the prior period cases.
Penalty for late payment of Installment Tax:
Penalty for underpaying Instalment tax is 20% of the difference between the amount of Instalment tax payable in respect of a year of income and Instalment tax actually paid.
How to Calculate Income Tax for Companies
Income tax rate for Resident companies is 30% of the taxable income while non-residents are taxed at 37.5% of their taxable income after adjusting for allowable and disallowable expenses for both.
How to Calculate Income Tax for Companies. Income tax rate for Resident companies is 30% of the taxable income while non-residents are taxed at 37.5% of their taxable income after adjusting for allowable and disallowable expenses for both.
Taxes in Kenya are categorised under two main heads, direct and indirect taxes. The indirect statutory taxes in Kenya applies when the purchase of goods are made. The various taxes under this banner are excise duty, custom duty & levies and V.A.T.
Turnover Tax is a tax charged on businesses whose gross turnover is more than Kshs.1,000,000 but does not exceed or is not expected to exceed Kshs.25, 000,000 during any year of Income. TOT is chargeable under Section 12 (C) of the Income Tax Act (CAP 470).
All businesses except partnerships must file an annual income tax return. Partnerships file an information return. The form you use depends on how your business is organized. Refer to Business Structures to find out which returns you must file based on the business entity established.
Small businesses are subject to numerous types of taxes and required to file an assortment of tax forms. Those taxes can include federal income tax, self-employment tax, employment tax, excise tax, and state and local taxes, including sales tax.
progressive tax—A tax that takes a larger percentage of income from high-income groups than from low-income groups. proportional tax—A tax that takes the same percentage of income from all income groups. regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups.
An S corporation, sometimes called an S corp, is a special type of corporation that's designed to avoid the double taxation drawback of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners' personal income without ever being subject to corporate tax rates.
Turnover tax is payable by any resident person, including companies, whose turnover from business is more than KES 1 million but does not exceed or is not expected to exceed KES 25 million during any year of income. The applicable rate of tax is 3% of the gross receipts of the business.
VAT is an indirect tax that is paid by the person who consumes taxable goods and taxable services supplied in Kenya and/or imported into Kenya. VAT on goods and services supplied in Kenya is collected at designated points by VAT registered persons who act as the agents of the Government.
The order provides that persons with disabilities who are in receipt of an income may apply to the Cabinet Secretary responsible for Finance for exemption from income tax and any other levies on such income. This exemption applies on the first Ksh. 150, 000 per month or Ksh 1.8 M per annum.
Installment Tax is paid in advance at four equal installments. It is paid before the year of income is over and before the accounts of the business are prepared to establish the actual tax payable.
In FY20, Safaricom paid Kes98 billion in duties and taxes, in addition to Kes20 billion in dividends to the Government of Kenya. Over the same period, Safaricom sustained more than one million jobs directly and indirectly and spent Kes58 billion with local suppliers.
The estimated salary for a Contractor is KES 80,000 per month in the Nairobi Kenya area. This number represents the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.
A tax obligation is a duty to account and pay applicable taxes. Tax obligations that are applicable under tax PINs in Kenya include: Income Tax Resident Individual, • Income Tax Non-Resident Individual, • Income Tax Company, • Value Added Tax (VAT), • Turnover Tax, • Pay as You Earn (PAYE), and • Excise Tax.
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