Clear answers to the questions we hear most often about tax in Kenya — from getting a KRA PIN to PAYE, VAT, income tax, penalties and refunds. Rates and thresholds change with each Finance Act, so always confirm the current position with KRA or your adviser before acting.
A KRA Personal Identification Number is your unique tax identifier issued by the Kenya Revenue Authority. You need one to file returns, pay taxes, open a bank account, register a business, buy or sell land, import goods, register a vehicle, and apply for many licences. Both individuals (residents and many non-residents with Kenyan income) and entities such as companies, partnerships and trusts must register.
Registration is free and done online on the KRA iTax portal. Individuals register using their National ID (or passport and an alien ID for non-citizens); companies register using their certificate of incorporation and the directors' PINs. You receive the PIN certificate by email immediately on completion.
iTax is KRA's online system for managing your tax affairs. You use it to register, file every type of return, generate a payment slip (PRN), check your ledger and apply for a Tax Compliance Certificate. Almost all routine tax interaction with KRA now happens through iTax.
A TCC is a document confirming you have filed all due returns and have no outstanding tax debt. It is often required for tenders, government contracts, work permits and some licences. You apply for free on iTax; if you are compliant it is issued automatically and is generally valid for twelve months.
You must keep records that support your returns — invoices, receipts, bank statements, payroll records, contracts and ledgers. Under the Tax Procedures Act these must be kept for at least five years from the end of the relevant tax period (longer if a matter is under audit or dispute).
Pay As You Earn (PAYE) is income tax on employment income. The employer is responsible for deducting it from each employee's pay every month and remitting it to KRA, along with a monthly PAYE return. It applies to salaries, wages, bonuses, directors' fees and most taxable benefits.
PAYE is charged on a graduated scale on taxable pay (gross pay less allowable deductions such as NSSF, SHIF and the Housing Levy). The lower bands are 10% on the first KES 24,000 a month, 25% on the next KES 8,333, and 30% on the next portion up to KES 500,000, with higher rates above that. Because the bands change with Finance Acts, use our PAYE calculator and net pay calculator for the current computation.
Personal relief is a fixed amount set off against your PAYE each month — currently KES 2,400 per month (KES 28,800 per year) for resident employees. It is granted automatically and reduces the tax payable, not the taxable income.
Besides personal relief you may qualify for:
Three statutory deductions usually apply in addition to PAYE: the Social Health Insurance Fund (SHIF) at 2.75% of gross pay, NSSF pension contributions, and the Affordable Housing Levy at 1.5% of gross pay. NSSF and the Housing Levy are also matched by your employer. See the net pay calculator for a full breakdown.
The Social Health Insurance Fund replaced the NHIF from October 2024. Instead of NHIF's fixed bands, SHIF is a percentage contribution — 2.75% of gross monthly pay — funding the new Social Health Authority. It is deducted by the employer alongside PAYE.
The National Social Security Fund is a mandatory pension contribution under the NSSF Act, 2013. The employee contributes 6% of pensionable pay and the employer matches it, up to lower and upper earnings limits that increase in phases each year. Because the limits change annually, the net pay calculator applies the current figures.
The Affordable Housing Levy (AHL) is charged at 1.5% of an employee's gross monthly pay, matched by the employer, and remitted to KRA by the 9th of the following month. It also applies to gross income of persons not in formal employment.
PAYE, together with SHIF, NSSF and the Housing Levy, is remitted by the 9th day of the month following the month of deduction. The PAYE return is filed on iTax. See the tax calendar for all deadlines.
VAT is a consumption tax charged on taxable goods and services supplied in or imported into Kenya. The standard rate is 16%. Some supplies are zero-rated (0%) and others are exempt. Use the VAT calculator to add or remove VAT from a price.
You are required to register once your taxable turnover exceeds (or is expected to exceed) KES 5 million in any twelve-month period. You may also register voluntarily below that threshold. Once registered, you must charge VAT, file monthly returns and remit the net VAT due.
VAT is filed monthly. The return and any payment are due by the 20th day of the following month. A nil return must still be filed for any month with no transactions.
Appointed withholding VAT agents deduct 2% of the taxable value at the point of payment and remit it directly to KRA. The supplier accounts for the balance of the VAT on their own return and claims the withheld amount as a credit. Our VAT calculator can apply withholding VAT.
Every person with a KRA PIN must file an annual return, even employees whose only income is taxed under PAYE and even where there is no income (a nil return). Companies, partnerships and other entities also file. Filing is done on iTax.
Individuals file for the calendar year (January–December) by 30 June of the following year. Filing late attracts a penalty, so don't wait for the deadline.
Turnover Tax (TOT) is a simplified tax for small businesses, charged on gross monthly sales with no deduction for expenses. It applies to resident businesses with annual turnover between KES 1 million and KES 25 million. It is filed and paid monthly by the 20th. Estimate it with the turnover tax calculator.
Resident companies are taxed at 30% of taxable profit. The branch of a non-resident company is taxed at a higher rate (37.5%). Tax is charged on profit after allowable expenses, unlike turnover tax which is charged on gross sales.
Instalment tax is income tax paid in advance during the year by taxpayers whose tax is not fully covered by PAYE or withholding — typically companies and self-employed people with a tax liability above KES 40,000. It is the lower of your current-year estimate or 110% of the prior year's tax, paid in instalments through the year. Use the instalment tax estimator to see the amounts and dates.
It depends on your margins. Turnover tax is charged on gross sales regardless of profit, so it can be costly for low-margin businesses but simple for others. Normal income tax is charged on profit after expenses. If your turnover is within the band you may elect out of TOT into the standard regime — talk to our tax advisory team to compare.
Withholding tax is deducted at source from certain payments — the payer withholds a percentage and remits it to KRA on the payee's behalf, by the 20th of the following month. Depending on the payment it may be a final tax or an advance credited against the payee's final liability. Our WHT calculator works out the amount to deduct.
Rates depend on the type of payment and whether the payee is resident or non-resident. Common resident rates include professional and management fees, dividends, interest, royalties and certain rents; non-resident rates are generally higher. Because rates vary by category and change with Finance Acts, confirm the exact figure in the WHT calculator or with KRA before deducting.
Resident landlords of residential property earning between KES 288,000 and KES 15 million a year pay Monthly Rental Income (MRI) tax at 7.5% of gross rent, with no expense deductions, filed monthly. Income above the band, or commercial rent, is taxed under the normal income tax rules on net rental profit. See the rental income tax calculator.
Capital Gains Tax (CGT) is charged at 15% on the net gain from transferring property such as land, buildings and shares not listed on the securities exchange. It is payable by the transferor on or before transfer of the property.
Yes. Income earned online — freelancing, content, e-commerce, consulting — is taxable like any other income and should be declared. Separately, Kenya taxes digital marketplace and significant-economic-presence income of non-residents under specific provisions that have changed in recent Finance Acts. If you earn from digital platforms, speak to our tax advisory team about the current rules.
You file returns on iTax, then generate a Payment Registration Number (PRN) — a payment slip. You can pay via bank, or by M-Pesa using KRA Paybill 222222 with the PRN as the account number. Keep the receipt as proof of payment.
Yes. If you hold a KRA PIN but had no income in the period, you must still file a nil return. Failing to file even a nil return can attract a late filing penalty.
Broadly, under the Tax Procedures Act:
Estimate the cost with the late filing & penalty calculator.
KRA may, on application, waive or remit penalties and interest in genuine cases — for example where the default was beyond your control. You apply through iTax with supporting reasons. A waiver is discretionary, so file and pay on time wherever possible.
If you disagree with an assessment, you must lodge a written notice of objection on iTax within 30 days, stating your grounds and paying any tax not in dispute. KRA must decide within 60 days. If you are dissatisfied with the objection decision you can appeal to the Tax Appeals Tribunal within 30 days, and onward to the courts.
Refunds — for example overpaid income tax, or VAT on zero-rated supplies — are claimed on iTax. KRA reviews and, once approved, offsets the amount against other liabilities or pays it out. Refund claims are time-barred, so lodge them promptly with full supporting documents.
Act early. Filing the outstanding returns (even late) stops further filing penalties accruing, and you can then plan the payment of any tax, penalties and interest, or apply for a waiver. Our tax advisory team regularly helps individuals and businesses regularise their position with KRA — get in touch.
Every situation is different. Talk to a Naicents specialist for advice tailored to you.