How To Pay Presumptive Tax In Kenya

How To Pay Presumptive Tax In Kenya.

This guide provides a step-by-step process for paying presumptive tax in Kenya. Presumptive tax is applicable to residents whose business turnover does not exceed Kshs 5 million during a year of income. The tax is due at the time of payment for a business permit or trade license or its renewal.

Persons Liable to Pay Presumptive Tax

The following individuals are liable to pay presumptive tax:

• Resident persons with a gross business turnover not exceeding Kshs 5 million during a year of income.
• Individuals who are issued or are liable to be issued a business permit or trade license by a county government.

Exceptions

Presumptive tax does not apply to:

• Individuals with income exempt from tax under the First Schedule of the Income Tax Act who possess a valid exemption certificate.
• Persons opting out of the presumptive tax regime by notifying the KRA commissioner in writing.
• Residents whose gross business turnover exceeds Kshs 5 million in a year of income.
• Income derived from management and professional services, rental business, or incorporated companies.

Rate for Presumptive Tax

The rate for presumptive tax is 15% of the amount payable for a business permit or trade license issued by a county government.

How to Pay Presumptive Tax

Follow these steps to pay presumptive tax:

1. Log in to iTax
   • Access the iTax portal and log in with your credentials.
2. Payment Registration
   • Click on “Payment Registration.”
3. Select Presumptive Tax
   • Choose “Presumptive Tax” from the list of payment options.
4. Fill in Required Details
   • Enter the necessary details as prompted by the system.
5. Generate Payment Registration Number (PRN)
   • Generate a PRN on iTax under the Presumptive Tax Payment section.
6. Make the Payment
   • Pay the tax using Mpesa Paybill Number 572572 or any other partner bank. Use the PRN as the account number.

Penalty for Late Payment

If you fail to pay the presumptive tax on time, the penalties include:

• A penalty of 5% of the tax due.
• A late payment interest of 1% per month, as stipulated in the Tax Procedures Act, 2015.

By adhering to these steps, you can ensure timely and accurate payment of your presumptive tax, avoiding penalties and maintaining compliance with Kenyan tax regulations