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KRA Announces Introduction Of Presumptive Tax For Small Businesses From January 2019

IMAGE/ COURTESY
IMAGE/ COURTESY

Business entities with a turnover of less that Ksh5 million will start paying presumptive tax as from January 2019.

According to a statement from the Kenya Revenue Authority, the entities will pay 15 per cent of the business permit fee or license.

Owners will pay for the tax at the time of payment for business permit fee or trade license.

Eligible taxpayers will have to log into iTax to make payment for presumptive tax. The taxpayers shall be required to generate a Payment Generation Number (PRN) on iTax under Presumptive Tax Payment, after which they can pay through MPesa paybill number 572572 or any other partner bank.

The tax does not apply to persons engaged in management or professional services, rental businesses and incorporated companies.

During the 2018-2019 Kenya National budget speech on June 14, 2018, the Cabinet Secretary (CS) to the National Treasury Henry Rotich proposed introduction of Presumptive tax to replace Turnover tax (TOT).

TOT was introduced in Kenya in January 2008. However, due to the prevailing political chaos at that time and numerous other extraneous factors, the uptake of the tax system has not been that successful.

Read: Bamburi Cement Issues Profit Warning, 2018 Earnings To Slump By 25PC

Under TOT, taxpayers are required to maintain minimal tax records and books. Submissions of tax returns and remittance of the tax are on a quarterly basis in simplified formats.

Following change of the system, KRA will conduct a sensitisation exercise across all counties as shown in the chart below.

Do you have a story you want told? Do you know of a sensitive story you would like us to get our hands on? Email your news TIPS to news@kahawatungu.com  Also WhatsApp 0708677607 with your news tips

Francis Muli

Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. He believes in unearthing societal rots that have been hidden from the public eye. He has also carved himself a niche in writing business stories. He has worked for various organisations including Kenya Television Service, Business Today among others. Follow him on Twitter @FmuliKE.

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