Administrative duty is most of what you will be doing as an entrepreneur; includes paying and keeping up with taxes and fees. To that end, here is a simple-read Kenya tax guide for running a business.
1.Business Permit
It’s only fair that a Kenya tax guide for a prospective business owner touches on the business permit. You get this after going through the business registration process (read about that here). A business permit received from your County Government. After paying an application fee of Sh.200, you will part with a fee that depends on the size of your business. Size, here, refers to the number of employees your business will have.
2.Corporate Income Tax
This is the income tax for artificial persons. Not fake friends but an incorporated legal structure like a company. The tax is 30% for resident companies and 37.5% for non-resident companies; deducted from the business’ income.
3.Turnover Tax
Turnover is the measure of how fast a company collects cash. It is applicable to your business if turnover does not exceed Sh.5 million but is above Sh.500,000. Tax rate is 3% of turnover. It is relevant to businesses involved in trade, professional services and manufactureded in the selling price of all goods and services. You are obligated to register for it if the turnover is to exceed Sh. 5 million. There are exemptions from VAT, approved by the Ministry of Finance, such as exports. VAT rate in Kenya is 16%.
READ: ALTERNATIVES TO STARTING YOUR OWN BUSINESS
5.Capital Gains Tax
While capital gains tax was revoked for the selling of shares, your company on the other hand has to pay for gains from capital. You know the buildings and more of that stuff. 10% rate is levied on resident companies and 20% on non-resident companies.
6.PAYE
Pay As You Earn (PAYE) is the poster girl of taxation in Kenya. You probably know that they are monies withheld from your income. Onus is on the entrepreneur, the employer, to deduct this withholding tax from her employees’ salary.
7.NSSF and NHIF
Should social security be privatized? Let’s not debate that now. Your employees are obliged to contribute a portion of their income to both NSSF and NHIF. Contributions are set to a ceiling of Sh.2400 and Sh.3840 respectively or (only employers will understand) 1% of payroll.
To pay these obligatory taxes you must first have a PIN for the business; free to obtaining from KRA.
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