What is Presumptive Tax?
This is a tax payable by a resident person whose turnover from business does not exceed Kshs. 5 million during a year of income.
Who should pay presumptive tax?
Persons liable to pay a Presumptive Tax shall be -
- resident persons whose gross turnover from business does not exceed Kshs. 5 million during a year of income;and
- who are issued or are liable to be issued with a business permit or trade license by a County Government.
The Presumptive Tax regime will not apply to:
- a person whose income is exempt from tax under the First Schedule of Income Tax Act and has a valid exemption certificate.
- a person who would otherwise pay tax under this regime but elects by notice in writing to the Commissioner not to be subjected to the Presumptive Tax.
- a resident person whose gross turnover from business exceeds Kshs. 5 million in a year of income
- any income derived from -
- management and professional services; or
- rental business; or
- incorporated companies
What is the rate for presumptive tax?
The rate of presumptive tax shall be amount equal to 15% of the amount payable for a business permit or trade license issued by a County Government. This shall be a final tax.
When is presumptive tax due?
The due date for payment of the tax shall be at the time of payment for the business permit or trade license or renewal of the same.
Filing of Returns
The Taxpayers under Presumptive Tax Regime are not required to file a tax return on the income from the business that qualifies under presumptive tax regime.
How do I pay Presumptive Tax?
Eligible taxpayers will have to log onto iTax to make payment for Presumptive Tax. The taxpayers shall be required to generate a Payment Registration Number (PRN) on iTax under Presumptive Tax Payment, after which they can pay through M-Pesa Pay Bill Number 572572 or any other partner bank.
What is the Penalty for late payment of Presumptive Tax?
5% of the tax due and a late payment of interest 1% per month as outlined in the Tax Procedures Act, 2015.
Note: Presumptive Tax is a final tax. This means, you are not required to declare the tax in your Annual Tax Returns.