Corporation Tax is filed online via iTax by filing an Income Tax ? Company Return (IT2C Form), on or before the sixth month after the of of an accounting period. – File and Pay KRA Taxes
For instance: a company whose accounting period runs from 1 Jan ? 31st Dec is allowed up to 30th June of the following year to file their Income Tax – Company Return. Filing after 6 months attracts a penalty.
The Return covers one fiscal year which is a period of 12 months within which the corporation chooses to make its financial statements.
Generate a payment slip via iTax and make payment at any of the KRA appointed banks.
If the annual tax liability is projected to exceed Kshs. 40,000, then you should pay in installments via iTax. This is called Installment Tax.
Read about filing & paying Installment Tax below.
3. Installment Tax
Installment Tax is paid in advance at four equal installments. It is paid before the year of income is over and before the accounts of the business are prepared to establish the actual tax payable.
What is the rate of taxation for Installment Tax?
Schedule of Installment Tax payments:
25% by the 20th day of the 4th month.
25% by the 20th day of 6th month.
25% by the 20th day of 9th month.
25% by the 20th day of 12th month.
Installment Tax for companies in the Agricultural Sector
75% which is the first 3 installments, combined and paid by the 20th day of 9th month.
25% is paid by the 20th day of 12th month.
After the accounts of the business are prepared to establish the actual tax payable, any balance of tax payable should be paid on, or before, the last day of the 4th month following the end of year of income or the accounting period.
4. Withholding Tax
What is the rate of taxation for Withholding Tax?
Withholding Tax rates vary depending on the income, and whether the recipient of the income is resident or non?resident.
Advance tax is paid before a public service vehicle or a commercial vehicle goes for annual inspection.
What is the rate of taxation for Advance Tax?
For vans, pickups, trucks and lorries – whichever is higher between Kshs. 2, 400 and Kshs. 1, 500 per ton of load capacity per year.
For saloons, station wagons, mini-buses, buses and coaches – whichever is higher between Kshs. 60 per passenger capacity per month and, Kshs. 2, 400 per year.
NOTE: Advance Tax is not a final tax. You are thus required to file the annual Income Tax return and pay any additional tax due.
6. Rental Income Tax
What is the rate of tax for Rental Income Tax?
Taxation of Rental Income depends on whether the property is residential or commercial purposes
Residential Rental Income Tax.
It is taxed at 10% on the gross rent received and no expenses are allowed.
The tax should be filed monthly via iTax, on or before the 20th of the following month.
NOTE: Residential Rental Income Tax is a final tax. Therefore, you do not have to declare it on your annual Income Tax return.
Commercial Rental Income Tax
It is taxed at the respective annual income tax rates and filed through the annual Income Tax Returns, on or before the last day of the 6th month after the end of the accounting period (irrespective of the amount).
After filing your VAT returns online, generate a payment slip for any tax due and make payment to any of the KRA appointed banks or through any mobile money transfer platform.
8. Excise Duty
What is the rate of taxation for Excise Duty?
The rate varies depending on the goods and services as specified in the 1st Schedule of the Excise Act, 2015.
Types of Excise Duty
Specific Duty Rate: This is where a specific amount of tax is charged per unit of measure on an excisable product e.g. Kshs. 120 per litre of spirit.
Advalorem Duty Rate: This is where a percentage rate of duty charged on the value of an excisable product.Excise duty on imports is charged on the sum of total Cost, Insurance and Freight (CIF) and amount of customs duty (if any) and;For locally manufactured goods, it is charged on a specific unit of measure or advalorem rate is charged on the Ex-factory selling price excluding VAT (if any), cost of excise stamps (if any) and cost of returnable containers (if any).
How do I pay for Excise duty?
Excise Duty on import is paid at the port of entry.
Domestic Excise Duty should be paid by 20th day of the following month.
Generate a payment slip via iTax and present to any of the KRA appointed banks to make the payment.
9. Capital Gains Tax (CGT)
What is the rate of tax for Capital Gains Tax?
5% of the net gain (Net Gain is Sales Proceeds, less the Acquisition and Incidental cost) after sale of a land or building.
0% on marketable securities.
CGT is a final tax. Thus it is not subject to further taxation after payment of the 5% rate of tax.
When is Capital Gains Tax due?
CGT is due and payable on or before the date of lodgement of application documents for transfer of property at the lands office.