Tuesday Aug 16, 2022

KRA iTax Kenya Portal 2022: How to File Tax Return Online 2022, Login, Registration and App

With the June 30 deadline for filing returns fast approaching, Kenyans are rushing to ensure that they beat the deadline for filing the returns.

The Kenya Revenue Authority (KRA) requires all citizens with a KRA Personal Identification Number (PIN) to file their returns, including those who earn below the taxable amount – that is, a Nil Return.

KRA has issued The following public notice of the schedule and deadline for the filing of the 2019 income tax returns.

‘Kenya Revenue Authority (KRA) wishes to remind all taxpayers that the tax returns for the year of Income are due for filing as from 1st January 2019 to 30th June 2019. The Taxpayers filing genuine NIL Income Tax Returns are at this moment notified that they can now successfully do so through the iTax system. Taxpayers are further advised to observe timelines and accurate declarations in their returns besides making full payments of any taxes due.

How to File KRA tax return online 2019

  1. Visit the KRA iTax online portal website at https://itax.kra.go.ke/KRA-Portal/
  2. At the KRA iTax portal login page enter your KRA Pin number, password and the answer to the security question
  3. Click on ‘e-Returns’ or hover on ‘Returns’ on the navigation bar and click on ‘File Returns’
  4. Select the type, Enter your taxpayer’s PIN and select the Tax obligation applicable to you before clicking on ‘Next’
  5. The next page will walk you through the filling process. Basically, you just need to click on the links provided to either download the Tax Returs form in Excel or ODS
  6. Fill out all the applicable areas in the downloaded tax returns form and save your document in your computer.
  7. You need to enable macros to be able to ‘Validate’ and Zip your File.
  8. Return to the page and select the period for which you are filling the returns, upload the zipped filled out iTax Returns form, agree to the terms and select ‘Submit’.
  9. When asked whether you would like to upload the file, click on ‘OK’

 How to file your Individual Tax Returns (Employment Income Tax)

KRA NIL Return: How to File KRA NIL Returns on KRA Itax Portal

In April 2018 the taxman introduced new rules governing the filing of tax in order to reduce cases of tax evaders who file Nil Returns. The new rules require Nil Return filers to explicitly declare that they do not have any other source of income through the online iTax platform.

This category of citizens includes:

  1. University and college students who applied for the PIN during their HELB Loan applications,
  2. Unemployed citizens who acquired the PIN when requesting for the Tax Compliance Certificate.
  3. Persons formerly employed that are currently unemployed and with no source of income

How to File KRA NIL Returns

  1. Visit https://itax.kra.go.ke/KRA-Portal
  2. Enter PIN/User ID (KRA PIN), click Continue and type in your password and answer the security question to access your iTax profile.
  3. To File a KRA Nil Return, click on the Returns menu, select File Nil Return option
  4. Under Tax Obligation, select Value Added Tax – VAT or Income Tax PAYE from drop-down menu.
  5. Enter the return period and click Submit
  6. An e-Return Acknowledgement receipt will be generated, Download the e-Return Acknowledge slip for your records

Presumptive Tax in Kenya

In accordance with the Finance Act, 2018, the Presumptive Tax became payable from 1st January 2019.

What is Presumptive Tax?

This is a tax payable by a Kenyan resident person whose turnover from business does not exceed Kenya Shillings five million (Ksh. 5,000,000) per annum.

Who should pay presumptive tax?

Any person acquiring or renewing a single business permit or trade license from the County Government is required to pay Presumptive Tax.

What is the rate for presumptive tax?

Presumptive Tax is calculated at the rate of 15% of the single business permit or trade license fee payable.

When is presumptive tax due?

The due date for payment of tax shall be at the time of payment for the single business permit or its renewal.

Presumptive tax does not apply to:

  1. Management and Professional Fees
  2. Rental business
  3. Incorporated Companies

In accordance with the Finance Act, 2018, the Presumptive Tax became payable from 1st January 2019. Presumptive Tax is calculated at the rate of 15% of the single business permit or trade license fee payable. Any person acquiring or renewing a single business permit or trade license from the County Government is required to pay Presumptive Tax.

Presumptive Tax only applies to businesses whose turnover does not exceed Kenya Shillings five million (Ksh. 5,000,000) per annum and excludes businesses engaged in management or professional services, rental businesses, and incorporated companies.

How to Pay Presumptive Tax in Kenya

  1. Go to the iTax portal and log into your iTax profile using your credentials: KRA PIN and Password.
  2. Select Payments Menu, Click Payment Registration.
  3. Select taxpayer or agent under applicant type as appropriate.
  4. Select Tax Head – Income Tax, Tax Sub Head – Presumptive Tax and Payment Type will populate as Self-Assessment Tax
  5. Select Payment Registration and capture all the relevant Presumptive Tax details and click the add button.
  6. Select the Mode of Payment. You can pay through KRA Mpesa Pay Bill Number 572572 or any partner bank.
  7. Submit and click on the link to download the Payment Slip.

KRA iTax form download

You can download these forms from this link

  1. T.CC 1 – Tax Compliance Certificate Application Form
  2. Application Form for Amnesty for Citizens in Diaspora
  3. I.T.1 – Individual Income Tax Returns
  4. I.T.1 – Non-Resident Individual Returns
  5. I.T.2C – December Cases Returns
  6. I.T.2P – Partnership Returns
  7. List of PAYE Forms Used by Employers
  8. User Guide for Filing Individual Returns Online.

Advantages of KRA iTax System

Some of the advantages of iTax includes.

  1. Access to the taxpayer ledger. including access by employees on their PAYE deductions . . .
  2. Real time update of the taxpayers ledger upon filing of returns and making payment . . .
  3. iTax is accessible at the comfort of the taxpayer, i.e. office or home. . . .
  4. Numerous payment channels – more Banks are being recruited to make payment of Domestic Taxes more convenient. . . .
  5. Simpler domestic tax return filing . the returns are based on the excel format. . . .
  6. Time saving. a.Reduced queuing at the banking hall .  b. Swift application c. processing of tax related services e.g Tax Compliance Certificates, Refunds, Amendments, waivers, tax exemptions etc . . .
  7. Reduction of Refunds backlog by allowing taxpayers to utilise approved refunds to offset other tax liabilities. . . .
  8. Communication via e-mail and SMS notifications upon completion of transactions . . .
  9. Electronic generation of certificates, i.e. PIN, Withholding Tax certificates, Exemption Certificates etc. . . .
  10. iTax returns are excel based and therefore is easy to use. Excel also accommodates several hundred thousand columns and rows of data . .
  11. xi.Inconvenience caused to taxpayers through Request for records by KRA officers will be greatly reduced.

KRA iTax App

Kenya Revenue Authority (KRA) introduces the iTax Mobile App; a software application designed to run on the Android platform to enable ease of access to tax services leveraging on the fast growing mobile industry in Kenya. The mobile app in its first phase will enable you facilitate any of the following tax transactions:

  • Filing of NIL returns for all tax obligations: VAT, Pay as You Earn (PAYE), Income Tax Company (IT2C), Income Tax Partnership (IT2P), Income Tax Individual (IT1), Monthly Rental Income (MRI) return, Turnover Tax and Excise return.
  • Payment registration for Monthly Rental Income (MRI) return. The generated payment registration number (PRN) may be used to facilitate tax payments in any of the agent commercial banks in Kenya or via mobile service providers (M-Pesa, Airtel).

KRA Website, KRA iTax Portal and Contacts

KRA iTax Portal, a web-enabled tax collection system, has simplified the tax processes, shortening time taken to file returns and increase revenue collection. https://itax.kra.go.ke/KRA-Portal/

KRA iTax Portal Services

  • PIN Checker – To verify PIN, Click Here
  • TCC Checker – To verify your Tax compliance Certificate,Click Here
  • WHT Checker – To verify a Withholding Certificate,Click Here
  • Status Checker
    To consult status of your applications,Click Here
  • Agent Checker
    To verify Witholding Agent,Click Here
  • Serial Number Checker
    To verify Middleware Serial Number,Click Here
  • Invoice Number Checker
    To verify Middleware Invoice Number,Click Here

Other KRA Website Online Services

  1. Customs Online Payment
  2. Common Cash Receipting System
  3. PIN Checker
  4. TCC Checker

Kenya Revenue Authority – KRA  Contacts

Times Tower Haile Selassie Avenue
Postal Address: P.O.BOX 48240 – 00100 GPO Nairobi
Tel: 020-310900, 020-2810000
Fax: 341342
Website: www.kra.go.ke

KRA Call Centre
Tel: +254 (020) 4999 999
Cell: +254 (0711) 099 999
Email: callcentre@kra.go.ke

About KRA (Kenya Revenue Authority)

The Kenya Revenue Authority was established in 1995 by an Act of Parliament, under Cap. 469 of the Laws of Kenya. The Authority has the responsibility of assessing, collecting and accounting for the tax in Kenya. It collects revenue and administers the revenue Acts for the purpose of facilitating trade. The Authority collects four main taxes: Customs and Excise, Income Tax, Value Added Tax (VAT) and motor vehicle road licenses and driving licenses.

The Kenya Revenue Authority – KRA has become a major source of development funding for the Government and is expected to be more important as the country implements the multi-layered Government under the Constitution of Kenya 2010.

KRA administers 17 revenue Acts, with the Value Added Tax (VAT) Act (Cap. 476), the East African Community Customs Management Act (EACCMA), the Income Tax Act (Cap. 470), the Customs and Excise Act (Excise Provisions) (Cap. 472) and the Traffic Act (Cap. 403) being the most important.

Following key reforms by the KRA, tax collection has been on the upward trend since 2003. Up to 2007, tax revenues increased and KRA met and even surpassed its targets. However, 2008 and 2009 proved a major challenge following the post-election violence and the global economic meltdown. Though KRA did not meet its overall targets, it collected more revenue than during the previous years. The achievements were a result of better tax administration.

In 2003/04, ordinary revenue rose from Kshs254.7 billion ($3.18 billion) to Kshs373.3 billion ($4.66 billion) in 2006/07 and Kshs441.5 billion ($5.51 billion) in 2007/O8. In 2008/09, revenue increased to Kshs515.8 billion ($6.44 billion).

In 2009~2010, KRA collected Kshs534.4 billion ($6.68 billion) against a target of Kshs545.2 billion ($6.81 billion), representing revenue growth of Kshs53.8 billion ($633 million).The collection is 11.2 per cent over the Kshs480.6 billion ($5.7 billion) collected in 2008-2009 though the overall result translates to a revenue deficit of Kshs10.8 billion and a performance rate of 98 per cent.

In 2010/2011, the Authority surpassed its revised target by Kshs4 billion (47.05 million) to collect Kshs634.9 billion (7.5 billion). This represented a revenue growth of Kshs100.5 billion or 18.8 per cent.

Under the KRA Revenue Administration Reform and Modernisation Programme (RARMP) implemented between 2004/05 and 2006/07, for instance, the tax collector registered 10 per cent annual growth in revenue collection. RARMAP had seven projects – Customs reform and modernisation, domestic taxes reform and modernisation, KRA automation, infrastructure development and training and change management projects.

Institutional reforms included the merger of Value-Added Tax (VAT) and Income Tax departments to form the Domestic Taxes Department. Also merged were the investigation and enforcement functions under the Investigation & Enforcement Department.

Key measures implemented in this period included the online Simba System 2005 for Customs collection and the Electronic Tax Register (ETR) for VAT. In its third three-year corporate plan in 2006/07, KRA succeeded in modernising technology and systems and exceeding collection targets.

The third plan ending 2008/09 focused on building professional staff with a strong team spirit, enhancing collection and strengthening enforcement, re-engineering business processes and expanding taxpayer services .The Fourth Corporate Plan spells out KRA’s strategic direction for the 2009/10 to 2011/12 for implementation of key revenue administration components of the first phase of the Vision 2030.

Its key planks are deepening of professionalism of its core staff while enhancing customer relations. At the end of the plan the Authority would have fully automated its operations and allow single-window viewing of customer tax details.

It may collect any other tax assigned it by the government. The Authority is headed by a Commissioner General. There is a board of directors headed by a chairman. There are three Revenue Commissioners, the Register of Motor Vehicles and heads of various service departments.

The Kenya Revenue Authority has introduced remarkable efficiency and professionalism in tax administration and operations. In the period of about eight years it has been in existence, its impact is clearly felt in the society. The headquarters, revenue and support departments, are all housed at Times Tower building in Nairobi.

Kenya Revenue Authority is divided into the following Departments, which are headed by Commissioners:

  • Customs Services Department
  • Domestic Services Department – Medium & Small Taxpayers(MST)
  • Domestic Taxes Department – Large Taxpayers Office (LTO)
  • Investigations & Enforcement
  • Technical Support Services
  • Corporate Support Services

In addition to the four divisions the Authority had seven service Departments that enhance its operational efficiency. These are as follows:

  1. Human Resources Department
  2. Finance Department
  3. Board Corporate Services & Administration Department
  4. Internal Audit Department
  5. Information & Communication Technology Department
  6. Research & Corporate Planning Department
  7. Marketing & Communication

Role of Kenya Revenue Authority in the Kenyan Economy

  1. To administer and to enforce written laws or specified provisions of written laws pertaining to assessment, collection and accounting for all revenues in accordance with these laws.
  2. Advise on matters pertaining to the administration or and the collection of revenue under written laws.
  3. Enhance efficiency and effectiveness of tax administration by eliminating Bureaucracy, Procurement, Promotion, Training and Discipline.
  4. Eliminate tax evasion by simplifying and streamlining procedures and improving tax payer service and education thereby increasing the rate of compliance.
  5. Promote professionalism and eradicate corruption amongst K.R.A. employee by paying adequate salaries that enables the institution to attract and retain competent professionals of integrity and sound ethical morals.
  6. Restore Economic Independence and Sovereign pride of Kenya by eventually eliminating the perennial budget deficits by creating organizational structures that maximize revenue collection.
  7. Ensure protection of local Industries and facilitate economic growth through effective administration of tax laws relating to trade.
  8. Ensure effective allocation of scarce resources in the economy by effectively enforcing tax policies thereby sending the desired incentives and shift signals throughout the country.
  9. Facilitate distribution of income in socially acceptable ways by effectively enforcing tax laws affecting income in various ways.
  10. Facilitate economic stability and moderate cyclic fluctuations in the economy by providing effective tax administration as an implementation instrument of the fiscal and stabilization policies.
  11. Be a ‘watchdog’ for the Government agencies ( such as Ministries of Health, Finance, etc ) by controlling exit and entry points to the country to ensure that prohibited and illegal goods do not pass through Kenyan borders.

Types of Taxes collected in Kenya are:

  1. Corporate tax
  2. Value Added Tax (VAT)
  3. Income Tax
  4. Rental Income Tax
  5. Advance Tax
  6. Withholding Tax
  7. Custom Duty
  8. Pay As You Earn (PAYE)
  9. Property Tax
  10. Entertainment Tax
  11. Excise tax
  12. Capital Gains Tax
  13. Turnover Tax
  14. Installment Tax
  15. Registration and transfer fee of motor vehicles and road and driving licences.

Other government revenues collected by the authority on agency basis include:

  1.  Petroleum Development Fund
  2.  Import Declaration and Fund (IDF)
  3. Foreign Motor Vehicle Inspection Fee
  4. Road Maintenance Levy
  5. Road Transit Toll Levy
  6. Aviation Revenue
  7. Revenue Stamps
  8. Kenya Bureau of Standards (KEBS) Levy
  9. Widows, Children and Parliamentary Pension Fund, Betting Tax
  10. Gaming (casino) Tax.

Whereas the Road Transport Department registers motor vehicles in Nairobi and Mombasa, it offers services through other KRA stations for revenue departments, and has its own staff in a number of towns. Elsewhere, the District Commissioners execute some RTD services on behalf of the Commissioner.

The Customs and Excise Department has its staff in every town with a main post office, in order to deal with chargeable goods arriving and being exported through post office. in addition, the department hasits offices in towns with bonded warehouse. A tax payer may lodge a claim for any credit that he was entitled to but was not given.

Tax in Kenya – Taxation in Kenya

Chronology of Taxation in Kenya

The statutory tax measures of Kenya dates back to the pre-colonial era. This was a time when people paid tithes to trade with tribes in different territories. At that time the primary traders were the Portuguese and the Arabs. The taxing structure of that time was fashioned after the Islamic laws and the then trade rules.

Under the established taxing structure the locals and the resident had to pay Sadaqa, Jizya and zakat. This three were mimicked from the Islamic laws. In addition to that harbour fees, capitation tax and such had to be paid. The taxpayers from that time were under two categorises, Muslim followers and account holders.

With the advent of the British in the East African Protectorate, including Kenya, the taxation system went through certain modifications. Few parts of the Arab and Portuguese taxation laws were included and a new structure was built. The new system had the following changes incorporated:

  • Hut and Poll Tax: A tax to be paid by locals through labour, money, grains or life stocks.
  • Land Taxes
  • Income Tax
  • Graduated Personal Tax

When Kenya gained independence, the statutory tax structure included trade, income and excise duty. The first ten years of the independence were spent on developing a sound taxation structure. By the year 1973, sales tax was made a part of the taxation system. However, the government had to go through certain rough patches due to the oil crises for which fiscal reforms were introduced. Around the same time, the government launched a
10 percent withholding tax and a 10 percent cuts on goods that were under the duty-free category.

With the fall of the EAC in 1977, the sales tax were increased to 15 percent, excise duty to 59 percent by the Kenyan government.In the year 2000, the government set a benchmark of collecting 24 percent of the GDP as taxes. Thus the consumption aspect was focused upon. As a result, progressive income tax became operative. Individuals with low-income group paid 10 percent whereas the high-income group were charged 65 percent. In addition to that, the income tax of local companies was set at 45 percent and the taxes for foreign companies were set at 52 percent.

Given the dynamic nature of laws, a lot of amendments have been brought in by the government since then. Changes have been brought in some of the tax laws as well as the rates incurred.

Income Tax in Kenya

In Kenya, the Personal Income Tax Rate is a tax collected from individuals and is imposed on different sources of income like labor, pensions, interest and dividends. The benchmark we use refers to the Top Marginal Tax Rate for individuals. Revenues from the Personal Income Tax Rate are an important source of income for the government of Kenya. lncome tax is almost as old as the customs duty in Kenya. Both taxes were introduced in the country by the colonial government and have existed ever since.

Unlike the VAT and Customs and Excise, income tax is a direct tax on individuals and limited companies. All the other taxes are indirect in the sense that they are indirectly related to your consumption of taxable goods and services regardless of your size of income. The tax is administered by the Commissioner of income Tax, under the Kenya Revenue Authority.

Anyone with chargeable income must notify the Commissioner of it, declare and pay tax thereon. lf you wait until the Commissioner finds you out, you will be charged penalty and interest on the unpaid tax for the period the tax remained unpaid.

Tax is charged on income. That income must have accrued or be derived from Kenya. Such income may be earned by residents or non-residents.

Sources of taxable income in Kenya

  1. Business income from any trade or profession
  2. Employment income
  3. Rent income
  4. Investment income
  5. Income from services rendered among others
  6. Pensions among others

Who is liable for PAYE

Any person who receives employment income of more than KSh11,135 per month either as a full time employee or part time employee; thus any employer is required to deduct tax the tax due from any remuneration paid to their employees. For pay-as-you-earn purposes the term “employer” is to be taken, when necessary, to include:

  • Any person having control of payment of remuneration
  • Any agent, manager or other representative in Kenya of any employer who is outside Kenya
  • Any paying officer of Government or other public authority
  • Any trust or insurance company or other body or person paying pensions.

For pay-as-you-earn purposes an “employee” is defined as inclusive of any holder of an appointment of office, whether public, private or calling, for which remuneration is payable. It includes an employee who retires on pension and stays in Kenya where pensions received from a registered pension fund exceed Kshs. 15,000 per month.

Income tax is chargeable on people. ln law, these people are either individuals or limited companies (including trusts). The income of a partnership is charged on the partners who share that income. Apart from collecting taxes directly, the Commissioner may appoint agents to collect taxes on his behalf and remit that tax (and account for) to him.

These agents are:

  1. Employers of employees monthly taxes called(PAYE).
  2. Other taxes called withholding tax.

The tax is collected at the point of payment by the payer who withholds it and remits to the Commissioner. Withholding tax is payable by the 20th of the month following the month of collection. PAYE is payable by the 9th of the month following the month of deduction. Advance Tax on commercial motor vehicles is payable to the Commissioner of Income Tax. It is charged on both cargo and passenger vehicles using the prescribed rates.

Rates of tax in Kenya

Individual rates of tax are graduated whereas companies have a fixed rate of tax. Equally, individuals enjoy some tax relief, which means that personal relief is a threshold below which no tax is payable. Not so with limited companies which must pay tax on the whole profit they make. A limited company does  not enjoy the personal relief. A partnership is not a person in law. Its income is therefore distributed among the partners and taxed on them.

Late payment of tax attracts a penalty of 20% and monthly interest of 2%. Married women can now be taxed individually under the Income Tax Act. Previously they could be taxed under their husbands return of income. They enjoy the same rights. They can submit their own returns and be assessed for tax separately from their husbands, if they want. Men and single women are taxed individually.

Personal identification Number (PIN) is issued by the Commissioner. It is issued to both residents and non-resident people living in Kenya.

PIN is required in many public offices where you may require service. In order to be able to get these services, you need PIN. To apply for PIN, you need to complete a PIN application form (obtainable from the income Tax Department offices) and attach your ID or passport copies. Limited companies, partnerships and trusts must also obtain their PIN.

There are various allowances given on the wear and tear of capital expenditure on assets being used in the business. Such assets include industrial buildings, motor vehicles, farm works (on farming), machinery, general plant and equipment as well as the approved hotels (tourist class usually). Like PAYE for employees, business people are now required to pay their taxes in installments.

The first installment is paid four months after the last accounting business date, then 6, 9, 12 and the final tax 14 months after the end of the accounting date. A refund arise when one has paid more tax than the actual assessed tax. Tax payable includes any penalties and interest that may accrue on one‘s tax account. A taxpayer lodges a claim for any credit on tax that one was entitled to, for example personal relief, and was not given.

The Value Added Tax in Kenya (VAT)

VAT is a consumption tax charged on taxable goods and taxable services sold provided locally or imported into Kenya. VAT Law is contained in the Value Added Tax Act Cap 476 Laws of Kenya. The Act is available on the KRA website, www.kra.go.kg.

The VAT Act 2013 implementation date is 2″“ September 2013.

Who Should Pay VAT?

  • VAT is payable by a registered person making taxable supplies. The registered person recovers the VAT from the receiver of the taxable supply in addition to the cost of the supply.
  • VAT on imported taxable goods is due and payable by the importer at the time of importation and it is charged as if it were duty of customs.
  • VAT on taxable services is payable by the registered person receiving the service and is due when the service is supplied.

Who Should Register for VAT? ‘

  • Any person supplying or who expects to supply taxable goods and taxable services value of which is Kshs. 5 Million or more in a year qualifies to register for VAT.
  • In determining the registration threshold, only the turnover on taxable supplies is taken into account. Taxable supply of a capital asset of the person and taxable supplies solely made upon sale of whole or part of the persons’ business should not be accounted for when determining the registration threshold.
  • The VAT Law also allows for voluntary registration for persons below the annual 5M threshold.
  • This is to enable the person to compete fairly for the market share.

What are the Current VAT Rates?

The following are the two rates of tax:

  • 16% applicable to taxable supplies other than the zero rated supplies.
  • 0% applicable to zero rated supplies listed in the second schedule to the VAT Act.
    Suppliers of zero rated supplies are entitled to claim input tax incurred in the course of making the zero rated supplies.

When is VAT due and Payable?

VAT is due and payable when a supply is made. The time of the supply including supply of imported services is the earlier of the following:

  • the date when the goods are delivered or services performed;
  • the date a certificate is issued by an architect, surveyor or any other person acting as a consultant in a supervisory capacity;
  •  the date an invoice for the supply is issued; or
  • the date when payment for the supply is received in whole or part.

The time of supply of goods by means of a vending machine, meter, or other device operated by use of coin, note or token shall be the time the coin, note or the token is taken from the machine, meter, or other device by or on behalf of the supplier.

Where goods are supplied under a rental agreement, goods or services are supplied through meter or under an agreement or law that provides for periodic payments, the goods or services shall be treated as successfully supplied for successive parts of the period of the lease or agreement or as determined by the law. The time of each successive supply shall be the earlier of the date on which the payment for the successive supply is due or received.

A registered person may defer payment of the tax due to a date not later than 20″‘ of the month succeeding that in which the tax became due. Any unpaid tax attracts an interest of 2% per month.

How is the TAX due and Payable Computed? Q. l

The VAT due and payable to the Commissioner is the difference between the Output Tax and the Input Tax.

Output Tax is the tax charged on sale of taxable supplies by the registered person.Input tax is the tax paid or payable by a registered person for local taxable supplies or imported taxable supplies for use in the registered business.

The registered person may at the end of the tax period in which the supply or the importation occurred deduct the input tax from the output tax subject to availability of appropriate documentations. Input tax is valid for deduction within six months from when the supply or importation occurred.

Any excess input tax is carried forward and deducted in the next tax period. However, the Commissioner may refund the registered person such excess input tax if satisfied that it arises from zero rated supplies.

What is the Difference Between Exempt and Zero Rated Supplies

Exempt supplies are goods and services which are not subject to VAT. Persons dealing solely with exempt supplies are not required to register for and SHOULD NOT charge VAT on any supply of the same. The exempt goods and services are listed in the first schedule to the VAT Act 2013.

Zero rated supplies are taxable but at the rate of zero. Suppliers are required to register if eligible and are entitled to input tax deduction. Taxpayers dealing wholly on Zero rated supplies are entitled to a refund and should make application as appropriate. Zero rated supplies are listed in the second schedule.

What are the Documents Required to Support Input Tax Deduction?

The following are the documents required to support input tax deduction:

  • An original Invoice or certified copy;
  • A custom entry duly certified by a proper officer and a payment receipt for the tax;
  • A customs receipt and a certificate signed by a proper customs officer stating the amount of tax paid in case of goods purchased from customs auction;
  • A credit note received in case of returned goods and or valid adjustment of an invoice by the registered person ;
  • A debit note received in respect of an additional charge of a taxable supply earlier invoiced.

NB. A credit note where applicable should be issued within six months after the issue of the relevant invoice. A credit or debit note issued should be serially numbered and shall include details of the name, address and PIN of the person to whom it is issued and should clearly relate to the supply made and the tax originally charged. The registered person is required to maintain proper records to support all transactions.

What Other Records Should A Vat Registered Person Keep?

A registered person should keep the following records:

  • Copies of all tax invoices and simplified tax invoices issued in a serial order number or certified copies of the original invoices;
  • Copies of all credit and debit notes issued in a chronological order;
  • Purchase Invoices, Copies of customs entries, receipts for the payment of customs duty or tax, credit and debit notes received filed chronologically;
  • Details of the amount of tax charged on supply made or received;
  • Tax account showing the totals of the output tax and the input tax in each tax period and a net total of the tax payable or the excess tax carried forward (VAT Account);
  • Copies of stock records kept periodically;
  • Details of each supply of goods and services from the business premises unless such details are captured at the time of the supply on the invoices issued at or before the time the taxable supplies are moved;
  • Such other records or accounts as the Commissioner may specify in writing.

The records should be kept in Kenya for a period of 5 years either in English or Kiswahili.

Deduction of Input Tax

Deductible input tax shall only apply to supplies directly attributable to taxable supplies. If the taxable supply to or a taxable import by a registered person partly attributes to making taxable supplies and partly for another use for a particular tax period, the input tax shall be determined as follows:

  • Full deduction of all the input tax directly attributed to taxable supplies; No input tax deduction on supplies directly attributed to other use;
  • Deduction of input tax attributable to both taxable supplies and other use is computed in according to the follow formular:

Where :-

  • A is the amount of input tax payable by the registered person during the tax period on acquisition that attributes partly to making taxable supplies and partly for other use;
  • B is the value of all taxable supplies made by the registered person during the period in Kenya;
  • C is the value of all supplies made by the registered person during the period in Kenya.

NB: Where the fraction of the formula is above 90%, the registered person shall deduct the whole input tax while if below 10%, no deduction shall be allowed.

Prohibited Input Tax

A registered person shall not be allowed input tax deduction on purchase of the following supplies:

  • Passenger cars or mini buses, and the repair and maintenance thereof including spare parts , unless the passenger cars or minibuses are acquired by the registered person exclusively for the purpose of making taxable supply of that automobile in the ordinary course of business of selling or hiring of passenger car or mini buses.
  • Entertainment, restaurant and accommodation services unless where such services are provided in the ordinary course of the taxable business.
    No tax shall be charged on the supply on which no input tax was allowed for deduction.

Relief Of Tax Paid Prior to Registration?

The VAT Act provides for relief of tax paid on exempt supplies that become taxable and also where a person registers for VAT had incurred input tax on taxable supplies intended for making taxable supplies.

The claim for relief should be lodged within three months from the date of registration or from the date the supplies became taxable. This applies to supplies purchased twenty four months immediately preceding registration or the date exempt supplies became taxable.

The registered person shall be allowed to make appropriate deduction of the relief claim from the tax payable on his next return once the Commissioner is satisfied that the claim is justified.

Refund or Tax Under the VAT ACT

The Commissioner can refund tax under the following circumstances:

  • Tax paid in error on any supply: The claimant should lodge a claim within 12 months from the date the tax was paid.
  • Bad debt: Refundable to a registered person who has accounted and paid tax on a supply but has not received any payment after a period of 3 years from the date of that supply. Claim for refund for bad debt should be done within 5 years after which it becomes invalid. If the registered person recovers the tax from the recipient of the supply after receiving the refund, such tax shall be paid to the commissioner within 30 days after the recovery date.

NB. Tax refunded in error shall be demanded from the person the refund hasbeen erroneously made and payment should be made within 30 days after the demand by the Commissioner.

Due Date for Submission Of VAT Returns ( VAT 3’5)

VAT return in respect of each tax period is submitted on or before the 20th day after the end of that tax period. The tax period means one calendar month.

A registered person may apply to the Commissioner in writing for an extension of the time to submit a return. The application should be made before the due date for submission of the return.

The Commissioner may make an assessment of the tax payable by a registered person where the person fails to submit a return, keep proper books of account, records or documents or to register if qualified.

A registered person may file the VAT return through the KRA Online portal www.kra.go.ke/ portal. Online filers with payment returns after successful online filling will generate an e-slip and present it to any of our appointed banks for payment.

Penalties and Interest

Failure to submit or late submission of a return by the due date attracts a penalty of Kshs 10,000 or 5% of the amount of tax payable under the return, whichever is higher.

Failure to pay the tax due or late payment attracts an interest of 2% per month or part thereof of the unpaid tax. The interest also accrues further interest at the same rate if not paid by the due date. The interest charged shall however not exceed 100% of the principal tax.

The penalty for any general offence committed under the VAT Act is Kshs 1,000,000 or jail term not exceeding 3 years or both.

De-Registration for VAT

A registered person who ceases to make taxable supplies or the turnover of the taxable business falls below Kshs. 5,000,000 in a year may apply to the Commissioner for de-registration.

Where a person qualifies for de-registration and fails to apply to the Commissioner, the Commissioner may by notice de-register such a person if satisfied that the person should be de-registered.

The de-registered person shall be issued with a notice of cancellation and immediately upon receipt cease to charge VAT.
A person whose registration is cancelled is required to submit a final return and pay all the tax due including the tax due on the stock at hand at the time of de-registration. Payment should be made within 15 days from the date of cancellation.

VAT is a consumption tax charged on local and imported goods and services. It is charged under CAP. 476  of the Laws of Kenya. It came into being in 1990 after replacing the Sales Tax.

The VAT Department is administered under the Kenya Revenue Authority and is headed by a Commissioner. The Department has 17 branches spread in the country.

The tax is charged and collected at the point of sale by any VAT registered business. This tax is paid to the Commissioner monthly through the banks and the returns filed with the Commissioner. In case of imported goods, the VAT is collected at the point of entry by the customs officers on behalf of the commissioner.

Anyone doing business, as a sole trader in partnership or limited company, must register with the Commissioner as an agent for VAT. You need PIN, copy of registration of business or business incorporation certificate and then complete a registration application form.

You need to register as VAT agent if:

  1. You offer for sale goods or services whose sales value exceeds KShs 3,000,000 per annum.
  2. You are a professional. There is no turnover limit for services rendered.
  3. You are about to commence manufacturing taxable goods or supplying taxable services which in the opinion of the Commissioner will exceed any of the values prescribed. In the 6″‘ Schedule of the VAT Act.
  4. You deal or offer for sale designated goods or services irrespective of the amount. A designated person is the one who deals in designated goods or services.

Designated goods are certain sale items like jewelery, timber, pre-recorded music and domestic electronic appliances, motor vehicles parts and accessories, household or domestic electric or electronic apparatus and appliances. They are taxable at every stage of sale.

Designated services are:

  1. Accountancy services including auditing, book-keeping.
  2. Legal and arbitration services including any services supplies in connection therewith.
  3. Services supplied by auctioneers, estate agents and valuers.
  4.  Services supplied by clearing and forwarding agents.
  5. Motor vehicles parts and accessories, household or domestic electric or electronic apparatus and appliances.
  6. You sell in any one year four or more motor vehicles.
  7. The Commissioner is satisfied that the interests of the business requires registration, though certain registration requirements for eligibility are not met.
  8. The Commissioner is satisfied that the interests of the business requires registration even though you do not meet certain eligibility requirements defined in terms of their turnout levels or supply of certain designatory goods and services. Designated goods and services have no sales value limit.

Customs and Excise Duty in Kenya

Customs and Excise Department in Kenya is headed by a Commissioner and is managed under the Kenya Revenue Authority. Customs is a term that is used to refer to the government taxes that are levied at points of entry of a country on imports and exports (though rarely). Such taxes include import duty, Excise and VAT or exports. its collection also includes implementing laws on forbidden goods by blocking them from entering the country or confiscating. Goods that are restricted for domestic market are not allowed to leave the country.

It is levied on imports whether they are for private or commercial use. For this reason, customs offices are to be found at the country‘s entry points: ports (Mombasa and Kisumu), borders (Malaba, Busia, Lunga Lunga, Taveta, Mandera and others) airports (Jomo Kenyatta international Airport – Nairobi, Moi international Airport — Mombasa, Eldoret, and other airports/airstrips handling aircrafts from neighbouring countries — like the Wilson Airport in Nairobi).

Excise tax is levied on a few items consumed in Kenya. These goods may be manufactured in Kenya or imported. For this reason, this tax is collected alongside import Duty at the entry points as well as at the manufacturers’ premises when excisable goods are being released to the market. These Excisable goods are: cars, tobacco (and tobacco products), beer and perfumery as well as the bottled water and fruit juices.

Currently, importers are required to clear their goods through a registered clearing and forwarding agent. They generally charge a fee of 0.5%to 1.0% of the value of goods to be cleared. However, motor cars are charged a fee of between KShs 10,000 — 15,000. Since these agents are many, it is easy to choose a good one. (The fee is not fixed but you can find an agent who may accept less and do a good job).

Exports do not attract any tax except for the raw hides and skins which attract 20% export duty in order to protect local tanneries. in addition, there are tax incentives for the manufacturers who produce for foreign markets under the EPZ, EPPO arrangements.

Withholding Tax in Kenya

Withholding Tax in Kenya is deducted at source from the following sources of income: Interest, dividends, royalties, management or professional fees, commissions, pension or retirement annuity, rent, appearance or performance fees for entertaining, sporting or diverting an audience.

Procedure for withholding tax in Kenya

Download the KRA paying-in-slip and the KRA payment-slip from the KRA website or use your favorite accounting package to generate them for you;-

Fill these out as precisely as possible. Finding the correct TAX code can be a bit difficult but is best found in the withholding tax pamphlet.

Withholding tax code 90 is the code you use with W8F. This is what you use if you are paying for professional services for example freelance consultants.

If paying via cheque, write a cheque for the amount due, indicating your phone number at the back of the cheque and carry all of your documentation to KRA. Otherwise, carry the cash amount due if paying cash.

Ask for directions to the payments section but most payments are made in the second (counting from the side of entry) tower of the Times Towers.

The withholding tax payment section is up one flight of stairs (to be exact, up the escalator).

Join the rest of the people at the queue. Depending on the date that you have visited KRA, queuing time could range between 20 minutes to 3 hours on average. If you go on the 20th, simply dedicate your entire day to the process!

Give the cashier the filled out documents and the money/cheque.

The cashier will keep the paying-in-slip but stamp the payment slips and give them back to you for your files. He/She will then process your payment and give you an official KRA receipt.

Our Two Cents: Avoid making your Withholding tax payments any day near the deadline. The total man hours wasted in the queue are more valuable than the amount you will probably be paying.

 Withholding Tax in Kenya Explained

Real Estate and Rental Income Taxation in Kenya

Residential Rental Income Tax – Frequently Asked Questions (FAQS)

1. What is Residential Rental Income Tax?

Real Estate and Rental Income Taxation: The Finance Act 2015 introduced a new Section 6A in the Income Tax Act Cap 470 Laws of Kenya, which provides for a simplified tax regime on rental income. The tax to be known as residential rental income tax shall be payable by any resident person from income which accrued in or was derived from Kenya for the use of residential property and which does not exceed ten million shillings (Kshs. 10 million) during any year of income.

2. What is the effective date of the new Tax?

The new tax takes effect on 1st January 2016 and will apply to rental income received from calendar month January 2016. The first return for January 2016 will be due on 20th February 2016.

3.What is the rate applicable for the new simplified Tax?

Residential Rental Income Tax shall be charged at a rate of 10% of gross rent received on monthly basis. No expenses will be allowed for deduction.

4.Will this be a final Tax?

Yes, the simplified tax at 10% will be a final tax. Landlords falling in this regime will not be subjected to further taxes on the residential rental income declared. In addition, eligible landlords shall not be required to file annual returns unless one has other incomes e.g. commercial rent, business income, farm income, etc.

5. What is the threshold for the new tax?

The Residential Rental Income Tax rate will apply only for persons whose rental income does not exceed Kshs. 10 million during any year of income.

6.When will the tax be payable?

The 10% tax on gross rent will be payable on monthly basis on or before the 20th day of the month following rent collection. Any tax not paid by the monthly due date will attract penalties and interest as specified in the current Income Tax Act

7. Who is eligible for new tax?

a) The tax shall be payable by a resident person (Individual and Company) effective 1st January 2016.
b) It applies to rental income that has accrued or is derived in Kenya for the use of residential property.

8. How will I compute the taxes due under this simplified tax regime?

Taxpayers are required to declare their monthly gross rent income and compute a final tax of 10% on gross rent. This means that property owners shall not deduct any expenses incurred.

9.Will all persons with rent income of up to Kshs. 10 million per annum be subjected to this flat rate?

Yes, the tax applies to all persons (Individual or Company) whose rental income from residential property is below the Kshs. 10 million per annum. However, landlords who wish to remain in the current tax regime can elect in writing to the Commissioner, to be taxed under the current tax rates. Landlords who choose to remain in the normal tax regime shall pay instalment taxes and file annual returns as required.

10. If I have both commercial and residential income can I join the simplified tax regime?

Yes, but the 10% simplified tax rate will only apply to income from residential property. Landlords earning Commercial rental income only will not be in this regime.

11. Where one has both residential and commercial rental income, how will this be taxed?

Such landlords will be in both regimes. However, one may elect to remain in the current regime, in which case such a person will continue to file one return for rent from both sources.

12. Will I be allowed to claim expenses incurred under the simplified tax regime.

No, under this regime no expenses will be deducted as the 10% rate applies to gross rent collected. If one wishes to claim expenses they can elect to remain in the current rental tax regime.

13. If I am in the simplified tax regime, will it be possible to change to the normal tax rate?

Yes, if you are in the new tax, it will be possible to change back to the normal regime provided a taxpayer applies in writing to the Commissioner before 31st December each year. However, there will be no changing of regimes during the year.

14. Will I be required to file annual returns while in the simplified tax regime?

No, you will not be required to file annual returns if you do not have other incomes. The simplified tax will be a final tax and will be declared and paid on monthly ba

15. If am in the simplified tax regime and the tenant is an appointed withholding agent and he withholds the tax upfront, will I be required to file a return?

Yes, you will file a monthly return and claim credit on withheld tax.

16. How will I file my return?

Eligible persons shall be required to file and make correct declaration through a simplified tax return via iTax System and pay tax by the 20th day following the month of receipt.

  • Hence, the first return for rent received in January 2016 shall be expected to be filed by 20th February 2016.
  • Return must be filed online via iTax as follows;

a) Log on to iTax.kra.go.ke

NB: To file return and pay online, first register with iTax via the iPage
facility at KRA website.

b) Download the residential rental income tax return form (NB: the return can also be completed online without downloading).
c) Fill-in your tax return.
d) Upload the completed return/form.
e) Generate the electronic payment slip to use in paying the tax at any KRA appointed bank or via Mpesa.
f) To pay via Mpesa; While generating the payment slip, select payment option of ‘cash’ and choose ‘bank’. Use the KRA Pay Bill Number 572572 and the Account Number is the Payment Registration Number quoted at the top right corner of the generated Payment Slip.

17. What are the exceptions for the Residential Rental Income Tax regime?

This tax regime will not apply to;
a) Rental income from commercial property.
b) Where a person who would otherwise pay tax under this regime elects by notice in writing to the Commissioner NOT to be subjected to the Residential Rental Income Tax.
c) Non- residents (as per Income Tax Act definition) landlords.
d) Landlords earning residential rental income of more than Kshs. 10 million
per year.

18. What benefits will I get if I take advantage of the simplified tax regime?

a) Simplified tax computation at 10% flat rate on gross rent instead of the 10% -30% rates in the current regime.
b) Landlords shall not be required to produce complex expense records to account for expenditure incurred.
c) This will be a final tax thus landlords will not be required to file annual returns if they do not have other incomes.
d) Compliance will be easy and cost effective.

Real Estate and Rental Income Taxation in Kenya – Clarification and Enquiries

For further clarification, please contact;

 Maurice Okelo on Tel +254(020)2715540/2717611/2717642/2718513
Ext.2201 Email; maurice.okelo@kra.go.ke
 Rose Kiendi Ext.2036, Email; rose.kiendi@kra.go.ke
 Josephine Mugure Ext 2025,Email; josephine.mugure@kra.go.ke

Enquiries can also be directed to the KRA Call Centre; Tel: +254 (020)4999999/+254 (0711) 099 999 or via email: callcentre@kra.go.ke.

You may also contact the KRA Help Desk on Tel: +254 (020) 2816095 or visit the Desk at Times Tower Building, Ground Floor or the nearest KRA Station for assistance. You can also communicate with us via email; rentalincome@kra.go.ke

For more details on the Residential Rental Income Tax visit the KRA website; www.kra.go.ke (web page named; 2015 landlords legislation)

Note that the Income Tax Act Cap 470 of the laws of Kenya is available at KRA website:-www. kra.go.ke:

Disclaimer: Taxpayers are notified that if there is any inconsistency between the provision of the Revenue Laws and the information contained herein, then the Revenue Laws shall prevail

Additional Information for Real Estate and Rental Income Taxation in Kenya

l. What is considered rental income for tax purposes?

Rent, a premium or similar consideration is considered as rental income tor tax. lt is income earned from rent either
directly or sublet. An example at sublet rental income includes but is not limited to, income earned by anchor persons that rent business premises then sub let them to other business entities.

2. Who is taxable?

All persons in receipt ot rental income unless exempted specifically under any laws e.g. Charitable organizations granted exemption by the Commissioner.

3. ls taxation on rental income a new law?

Rental income has been subject to taxation as income tax since 1973 as spelt out in Section 3(2)(a)(m) of the Income Tax
Act which, states that income tax shall be charged tor each year ot income upon all the income of a person, whether resident or non -resident, which accrued in or was derived from Kenya. This should be read with Section 6(l ) which, says that gains or profits includes a royalty, rent, premium or similar consideration received tor the use or occupation of property. In addition, rent on non-residential buildings (Commercial rent) is also taxable under Section 5 and 6 VAT Act Cap 476.

4. ls this a new tax and will the burden he passed to tenants through increase in rent?

This is not a new tax. There is no justification tor landlords to increase rent as this is not a new tax measure. ‘

5. I have not been declaring tax on rental income so l am in a dilemma on how to compute the tax due.

The media has given the impression that rental income will be taxed at 30%. Please clarity this. Taxpayers are required to declare the gross rent income but pay tax on net income it residents tortax purposes. This means that property owners should first deduct all expenses that are wholly and exclusively incurred in the production ot income e.g. repairs, maintenance, caretaker costs, land rates, insurance, land rent, agenttees, grounds men etc. This is spelt out in Section l5(l) ot the Income Tax Act.

In certain circumstances they are also allowed to deduct capital allowance. Such expenses have to be supported. Section l5(2)(t) allows taxpayers to also deduct the cost of alterations incurred with an aim of maintaining existing rent. Section l5(3)(a), allows them to deduct interest on money borrowed and used to put up rental property. However non-residents do not quality to claim any expenses.

Rates of Taxation for Real Estate and Rental Income

Taxation rates are dependent on whether the person is an individual or corporate entity and whether resident or non-resident.
a) For resident individuals, the annual tax rates (on total annual income including net rent income) are as follows;
On the first Kshs. 121,968 ………………… .. 10% _
On the next Kshs. 1 14,91 2  ……………… .. 15%
OnthenextKshs.114,912………….  20%
Onthe next Kshs. 114,912 ……………….. .. 25%
On all income over Kshs. 466,704 ………. .. 30%

Note: The above scales are referred to as “graduated”
b) For resident companies, the net annual income together with other incomes, if any, are taxed at the flat rate of 30%.
c) For non-residents (for tax purpose), there is only withholding tax @ 30% on gross rent and which then is a final tax, they are not allowed to claim any expenses.
d) For partnerships, only a single rent declaration is submitted but the partners will be taxed on their respective shares ofthe rent income.
e) Estate of deceased landlords. The net rent income (supported by rent schedules) accruing to the estate of deceased is chargeable at resident corporate tax rate of 30%.
t) VAT on non-residential Rent (Commercial rent). This is charged at 16% as it is not exempted by the 3rd Schedule of The VAT Act.

6. l am ready to comply with the law. However, I wish to know whether i will be granted amnesty tor the past years that l did not declare rental income?

There is no provision for amnesty at the moment.

7. Should l charge VAT on non-residential (commercial) rent and if so what are the requirements?

Rent earned from non-residential property (commercial building) is chargeable to tax under the VAT Act. However, to
charge VAT on the rent, you must register upon attaining the registration requirements as specified in the 6th schedule of VAT Act. The registration is done online by choosing the VAT obligation. Visit the KRA online services at www.Kra.go.ke for more details.

8. In case of deceased landlords, who is supposed to account for the tax in respect to the estate of the deceased?

The estate administrator or legal personal representative is expected to account for Tax on rental income.

a) Landlords are allowed to claim Industrial Building Allowance on the cost of construction as per paragraph 1(1) of Second Schedule of the Income Tax Act. The applicable rates depend on; the nature, use and area the building is constructed. The rates are provided tor in paragraph 1(1) and read together with paragraph 5 of Second Schedule Income Tax Act.
b) Wear and Tear allowance on machinery and equipment as perthe second schedule ot the Income Tax Act
c) Personal and Insurance reliefs for individuals as per Section 30 and 31 at Income Tax Act
d) Home Ownerships Savings plans for Individuals as per Section 15 of Income Tax Act ‘
e) Mortgage relief tor Owner occupier Income per Section 15 of Income Tax Act

10. What is the due date for payment of tax on rental income?

Taxes are paid in tour instalments on the 20th of the 4th month, 20th of the 6th month, 20th of the 9th month and 20th
of the 12th month of the accounting period. Any balance of tax is payable by 30th of the fourth month alter the end of the accounting period.

11. How is tax on rental income computed, and what is the rate applicable?

Depending on the tax resident status and type of the person, the tax is computed either on the gross rent or net rent (alter deduction at allowable expenses). For rates at tax refer to question (5) above.

12. What expenses are not allowable as deductions?

Expenses not wholly and exclusively incurred in the production at rent income as spelt out in Section 16 at The Income Tax Act, tor example principal loan repayments, cost of construction, expenditure of personal nature (e.g. school tees) e.t.c.

13. Are loans repayment taken for acquisition or construction of rental property deductible for tax purposes?

The principal payment towards the loan is not deductible but the interest is deductible.

14. What rate is applied to rental income arising from furnished lettings?

The rate is the some tor all types of rent (for details refer to question 5). However, one is allowed to deduct wear and tear for furniture and linen in computing taxable income.

15. I am Kenyon living in diaspora and earning rental income from a property in Kenya. Do I have to pay tax on this income, and if so how?

Yes. Any Kenyan living out of the country but owns property in Kenya must pay tax in Kenya on the rent earned. If non-resident (as defined in Section 2 of the Income Tax Act Cap 470), such rent is subject to a withholding tax at 30% of the gross which is then a final tax. However, if resident the rate of tax shall be at graduated scale on net rent income.

16. I am a real estate developer. What aspect is taxable?

Real estate developers who are in the business of selling property should pay tax on their net profits. They are allowed to deduct expenses incurred as per Section 15 of The Income Tax Act e.g.:
a) Cost ofland
b) Professional fees (Quantity Surveyors, Architects, Civil engineers, Electrical engineers e.t.c)
c) Material costs
d) Labour
e) Advertising/marketing
f) Other administrative costs

17. l am a real estate developer. What incentives are available to me?

The following are the tax incentives:

  • Under Section 20C of the income Tax income Act the income of Real Estate Investment Trusts (REITs) is not taxable.
    ‘ A REIT is a vehicle which allows investors to pool resources together and invest in Real Estate. The shareholders of REITs acquire units which are trade-able other stock market. The mode of taxation is the same as that of Unit Trusts which are tax exemption their investment income.  This incentive is available effective 1st January, 2012.
  • Under the VAT Act, persons are allowed to apply for VAT remission on low income housing proiects. The following is additional information regarding the incentive:
    • Introduced in 2008 by Finance Act 2007.
    • Regulations are contained in Legal Notice No 115 of 5th September, 2008.
    • The incentive is meant to encourage housing provision to low income earners.
  • A low income earner means a person whose monthly gross earning amount to Kshs. 35,000 or less. A low-income house means a house put up at a construction cost of not more than Kshs. 1,600,000 and of plinth area of not less than 30 sq metres
  • A Low income housing project means a project of not less than 20 housing units intended tor low income earners. Note that the Income Tax Act Cap 470 and VAT Act Cap 476 of the laws of Kenya are available on KRA website at www.kra.go.ke

Real Estate and Rental Income Taxation in Kenya (Video)

KRA PAYE Calculator

KRA PAYE Calculator: This calculator works out PAYE due given the taxable pay. It can work out PAYE for a single month or the whole year, either for this year or for a year in the recent past.

KRA iTax Kenya Guide

How does iTax Kenya work?

iTax allows one to update their tax registration details, file tax returns using Microsoft Excel or Open Office, register all tax payments and make status enquiries with real-time monitoring of their ledger/account.

iTax Kenya  – What is iPage?

This is the profile page in iTax that allows for the update of taxpayers registration details.

Who should update iPage?

All taxpayers (individuals, companies, parastatals, NGOs, etc.) should update their information using the iPage.

Why should I update my iPage?

iTax provides for capture of additional registration data not previously captured. The information required in iTax includes among others your county, employer, cell phone contact, unique email address, tax agent, etc.

When should i update my iPage?

Taxpayers are required to update their iPage on first log in to iTax.

Where can I update my iPage?

Go to https://itax.kra.go.ke or KRA website www.kra.go.ke. On the website you will see the iTax portal banner. Click on it to access the iTax portal.When logging for the first time, the initial requirement will be updating iPage.

How do I update my iPage?

One is required to fill in the mandatory fields especially under basic information then submit the data so as to update the taxpayers information with KRA.

What do I do if my PIN is not recognized when I try to update my iPage?

This happens for new PINs that have not been migrated to iTax. The taxpayer is required to send this PIN to KRA for migration through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office.

Do I need a VAT certificate if I have a PIN certificate?

No. PIN certificate is sufficient. What the taxpayer need to do if they start dealing in vatable business is to add VAT obligation on the PIN.

What happens when we try to update iPage and the data is not consistent with the database?

The taxpayer is required to send this PIN to KRA for data correction through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office.

I am trying to register but I keep getting error ref. no. 139…..what do I do?

This happens when there is poor internet connectivity. Sorry keep trying

What do I do if I have Error in date of birth or certificate of incorporation?

The taxpayer is required to send this PIN to KRA for data correction through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office.

What do I do if Income tax date comes before business commencement date?

The taxpayer is required to send this PIN to KRA for data correction through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office.

Can I file all returns on iTax?

Yes you can. First you need to login into the system then go to the returns tab and select file return and download the return. You need to fill the return offline before you generate a zipped file that you will upload.

How do I treat Credits from a previous VAT return?

On the VAT return at the Tax Due worksheet, you can be able to put the figure at from the previous months credit.

If I dont have PINs for my suppliers what should I do?

Invoice without PIN is not valid tax invoice & therefore not allowed for tax deduction

How do I treat Credit notes in iTax?

iTax has provided for inclusion of the credit notes in the return. While filling the returns one needs to input a negative figure but quote the invoice relating to the credit note.

Can I correct an error once I file a return?

Yes. You can do this by filing an amended return.

I have heard that before one can complete the Excel Return one is required to enable MACROS on the excel sheet. What is enabling MACROS and how does one do this?

MACROS are inbuilt formulae in Excel that should be enabled once you download the return so that you can be able to fill in the details of the return. Enabling MACROS is on the read me section of the return and it gives you a step by step guide depending on the Excel version you have.

My business system produces a lot of data. With the Excel returns I will be required to fill every cell to input my data. This is cumbersome and time consuming. What will you do to facilitate and eliminate this inconvenience?

You can be able to do the returns in Excel and import the information to the return. You need to save this information in CSV (Comma delimited) for further information please contact KRA certified Intermediary agents, or call 020 2390919 and 020 2391099 and 0771628105.

I have a PIN but have not traded. Do I have to file returns?

Yes, you need to file a NIL return. All you need to do is go to your iTax profile, Returns, and select the nil return option and submit.

What do I do if I am trying to upload my return but the system tells me I have to file returns for previous months/year?

In the case of first time filling, you need to call KRA for the change of rollout date. In the case that you had filled the first return on iTax and failed to file subsequent returns i.e. for one or three months, you need to file the missing returns in iTax before you can file the current one.

What do I do if I am trying to file VAT/PAYE return on iTax but the system tells me I am not registered for that return?

You need to update your tax obligation information in your iTax account to enable you to file.

Can I view a copy of the previous returns that I have filed for previous tax periods?

Yes. You log in to your account, select the returns tab then consult return. You need to select the type of return and the period.

What do I do if I am trying to upload a return and get Pin A0079…… is invalid but valid in PIN checker?

Call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office for assistance

Can I make a payment before filing a return?

Yes, you can. Payments of taxes and filing returns have been delinked. However, any return that does not have a matching payment will automatically attract penalty and interests.

How do I make a payment?

The taxpayer will first generate a payment registration number (PRN) on their iTax profile. The printed PRN will then be taken to the bank together with the mode of payment (Cash, Cheque or RTGS)

What is a Payment Registration Number?

Payment Registration Number or PRN replaces the manual tax payment stationeries such as P11 and VAT3. PRN is generated electronically and is bar coded with a unique serial number for every transaction. The PRN must be quoted when making payments to allow taxpayer ledger to be updated. PRN will expire in 7 days if not utilized.

How do I generate a PRN?

On the taxpayer’s profile, go to Payments then register payment. Fill in the electronic form first by selecting the taxhead. Once all the mandatory fields (marked with red stars) have been filled submit to generate PRN

Can I pay taxes through my local bank?

Yes as long as your bank has an agreement with KRA. Currently, KRA has made arrangements with 27 banks. Other banks are still coming in and it is expected that once iTax is rolled out all banks will be in iTax.

What do I do if I made payments but I cannot see them on my iTax ledger?

This mainly happens if payments are outside iTax platform i.e. without generating a PRN or not quoting the PRN when executing the payment. The taxpayer should provide the payment documents to KRA for back-office reconciliation.

How do I make payments for WHT in iTax?

To make a WHT payment you need to click on the payment registration then select income tax on the tax head then select WHT and generate a payment slip by adding the taxpayers that you have withheld their payment.

How do I make payments for Agency revenue in iTax?

To make a payment on agency revenue click on the payment registration then select go to the tax head then select agency revenue and generate a payment slip by selecting the agency revenue you want to pay i.e. land rates, stamp duty, sugar development levy, KEBS

Why don’t I see Agency revenue payments on my ledger?

KRA does not maintain the ledgers they are usually maintained by the Principal bodies e.g. KEBS, Ministry of Lands, Kenya Sugar board, etc

KRA iTax  Password Reset

Log onto www.kra.go.ke/portal, open tax payer registration link and On the right-hand side under Online Services, click on Taxpayer Registration. Select the “forgot password” link which will lead you to a window which will require you to input your PIN and email address and then you reset your password.

What is a tax obligation in Kenya?

A tax obligation is the liability of tax that one has.

What do I do after registering and can see only two icons(change password and log out)?

Normally a taxpayers profile will be fully populated will all icons within 24 hours upon registration. However, a taxpayer intending to transact immediately can send this PIN to KRA through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office

The system prompts you to at least have one of the tax obligations.

This happens especially in the case of individual registration. Just send this PIN to KRA through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office and request for the obligation.

Tax Compliance Certificate in Kenya

Application of KRA iTax Tax Compliance Certificate

How do I apply for TCC in iTax?

The taxpayer will apply for a Tax Compliance Certificate through their iTax profile. The application will be received by a KRA officer and processed electronically. Successful applicants will receive an email with the Tax Compliance Certificate attached. Unsuccessful applicants will be notified of the areas of non-compliance.

How can I change the current email address from the one I registered within iTax?

Change of email address can be initiated by the taxpayer. On the taxpayers profile under registration, the taxpayer is allowed to amend PIN details. Once the process is initiated by the taxpayer, a task is created for approval by a KRA officer.

In case I forget my KRA PIN password what can I do?

Go to the iTax log in page and select forgotten password. You will be asked for the security question you used when registering for the first time. Once you submit the information successfully, new login credentials will be sent to your registered email address.

How can I change my KRA PIN password if I have forgotten my security question

The taxpayer is required to send this PIN to KRA for password and security question reset through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office.

What do I do if my KRA Pin is locked?

All blocked password is reset automatically within 24 hours. Alternatively, the taxpayer is can send this PIN to KRA to be unlocked reset through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office.

Advantages of KRA iTax System

Some of the advantages of iTax include.

  1. Access to the taxpayer ledger. including access by employees on their PAYE deductions . . .
  2. Real time update of the taxpayers ledger upon filing of returns and making payment . . .
  3. iTax is accessible at the comfort of the taxpayer, i.e. office or home. . . .
  4. Numerous payment channels – more Banks are being recruited to make payment of Domestic Taxes more convenient. . . .
  5. Simpler domestic tax return filing. the returns are based on the excel format. . . .
  6. Time saving. . . a. Reduced queuing at the banking hall.  b.Swift application and processing of tax related services e.g Tax Compliance Certificates, Refunds, Amendments, waivers, tax exemptions, etc
  7. Reduction of Refunds backlog by allowing taxpayers to utilize approved refunds to offset other tax liabilities. . . .
  8. Communication via e-mail and SMS notifications upon completion of transactions . . .
  9. Electronic generation of certificates, i.e. PIN, Withholding Tax certificates, Exemption Certificates etc.
  10. iTax returns are excel based and therefore is easy to use. Excel also accommodates several hundred thousand columns and rows of data.
  11. Inconvenience caused to taxpayers through Request for records by KRA officers will be greatly reduced.

KRA iTax Portal Systems Minimum Requirement

Which are the recommended browsers that support iTax?

iTax works well with Firefox Mozilla

When a new version of Excel is released, my company is usually at the forefront in adopting new technology? Will the iTax returns work well with the upgraded Microsoft office?

iTax generated returns will work well with Microsoft office 2007 and 2010. Taxpayers will find difficulties working with the newly released versions

Tax Refunds in iTax Portal

Can I apply for refunds in iTax?

This has not been rolled out yet so refunds will still be processed the usual way.

How can I know my PIN and station if I have my ID?

You can query through dialing (572) from your mobile phone and follow the steps to get the information. You are charged a small fee of Kshs 5.

Does KRA offer training on iTax?

  1. Yes. Training is done free of charge every Thursday at 5th floor Times Tower. You can also visit our nearest KRA office. . .
  2. User guides are also available at KRA offices and website to provide step by step instructions on how to navigate through the iTax system.
  3. RA intends to partner with appointed, licensed and trained Intermediary Agents who will assist taxpayers in Registration and filing of tax returns
  4. KRA registered Tax Agents (Including ICPAK/ LSK members) will be enabled to transact on iTax on behalf of taxpayers using their own login credentials.

How secure is my information on iTax? Does KRA intend to secure taxpayers information by ensuring that no other party has access to the files once the data is uploaded on to KRA website? Who will be able to access the system and who will not?

  1. Some of the security features integrated into iTax are:.
  2. During the update of registration details, the taxpayer is required to provide an email address that is unique for every PIN registered. The security features for the creation of a password have been strengthened and the taxpayer is at liberty to determine the strength of his/her password. In addition, the security question authenticates the rightful user on the issuance of a new password. . .
  3. The security stamp provided upon login is to prevent phishing programs that attempt to hack into the taxpayers iTax account. . .
  4. There is an on-going Government initiative under the National Public Key Infrastructure (PKI) Project in which KRA is a pilotee. This security feature will enable taxpayers to securely transact on iTax and verify their identity via digital signature.

Where can I get support in case I have any issue with iTax?

Through email Callcentre@kra.go.ke and DTDOnlineSupport@kra.go.ke or call 020 2390919 and 020 2391099 and 0771628105 or visit the nearest KRA office

How Tax in Kenya is used

  1. Revenue generation: By taxing citizens, the government can generate money that can be spent to improve the lives of the citizens or to cater for any other government expenditure. Some areas where the government uses taxes include provision of social welfare, and infrastructure development. A fraction of the revenues generated goes to financing the debts accrued by the government.
  2. Redistribution of Income: Kenya has a progressive tax structure whereas income increases one pays a high percentage of taxes. Since high-income earners pay slightly more than the low earners, taxation enables the redistribution of incomes in the economy.
  3. Controlling Externalities: An externality refers to a byproduct or consequence of activity (commercial or industrial) felt by a third party like pollution. In a bid to discourage negative externalities such as noise pollution, governments can impose a tax.
  4. Repricing: Taxation can help reprices goods and services deemed to be incorrectly priced such as alcohol, and tobacco Representation The people choose the government to represent them to ensure responsible management of their taxes.

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