Steps To File Turnover Tax Return In Kenya

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Steps To File Turnover Tax Return In Kenya

Steps To File Turnover Tax Return In Kenya

This article will walk you through the process of filing Turnover Tax (TOT) in Kenya. Turnover Tax is a tax levied on a company’s gross sales under Section 12 (c) of the Income Tax Act.

TOT was initially implemented in the Finance Act of 2006, was replaced by Presumptive Income Tax in the Finance Act of 2018, and was reintroduced in the Finance Act of 2019.

Turnover Tax is payable by residents whose gross business turnover exceeds Kshs 1,000,000 but does not exceed or is not projected to exceed Kshs 50,000,000 in any given year. It does not apply to the following situations:

  • Persons with business income below Kshs 1,000,000 and above Kshs 50,000,000 per annum.
  • Rental income.
  • Management, professional and training fees.
  • Any income that is subject to a final withholding tax under the Income Tax Act.

TOT should be filed and paid once a month. The payment is due on or before the 20th of the following month.

Rate for Turnover Tax

  • Turnover Tax is charged at the rate of 1% on gross monthly sales.
  • Expenses are not deductible.
  • This is actually a final tax.

Penalty for non-compliance

  • TOT late filing penalty is Kshs 1,000 per month.
  • Late payment penalty is 5% of the tax dues.
  • Interest on unpaid tax is 1% of the principal tax due.

How To File Turnover Tax Return

1. Log in to iTax via https://itax.kra.go.ke/KRA-Portal/.

2. Under the return menu, select file return, then turnover tax.

3. Download the excel return.

4. Complete the return and submit.

5. After filing the return, go to the payment menu.

6. Select payment then amount payable and generate a payment slip.

7. Make the payment at a partner bank or through Mpesa.

Note: Eligible taxpayers should use iTax to add TOT obligations, file monthly returns, and make payments.

A taxpayer whose turnover is within the relevant threshold but elects not to be taxed under TOT is presumed to have informed the Commissioner of this decision by failing to register for TOT.

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Steps To File Turnover Tax Return In Kenya

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