The Kenya Revenue Authority has re-introduced turnover tax, in line with the Finance Act, 2019. Businesses whose income does not exceed KSh 5 million will pay 3% on gross sales, following the passing of the Finance Act.
“The Finance Bill proposes to re-introduce turnover tax at the rate of three per cent of the gross receipts of the business payable monthly and is to be paid by any resident person whose gross sales do not exceed Sh5 million annually while the presumptive tax will be maintained as a minimum tax,” reads the Finance Act.
Businesses will file and pay the tax every month, with no expenses allowed under the tax. Additionally, businesses are also liable to pay presumptive tax, offset against payable turnover tax. The presumptive tax stands at 15% of the amount payable for a single business permit.
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KRA requires businesses to file their turnover tax on or before the 20th of the following month. Late payment will attract a 5% penalty on the tax due whereas late filing attracts a KSh 5,000 penalty per month. The 5% penalty also applies to presumptive tax.
The commission exempts persons registered for VAT, employment income, and rental income from turn overtax. Moreover, limited liability companies, and management and professional services are exempt.