Advance Tax in Kenya is a prepayment of tax applicable to owners of public service vehicles (PSVs) and commercial vehicles. This tax is paid before the vehicle is licensed for operation and is not considered a final tax; it is offset against the taxpayer’s total income tax liability for the year.
Tax Rates:
The rates for Advance Tax are determined based on the type and capacity of the vehicle:
- Vans, Pick-ups, Trucks, Prime Movers, Trailers, and Lorries:
- Kshs. 1,500 per ton of load capacity, subject to a minimum of Kshs. 2,400 per year.
- Saloons, Station Wagons, Mini-Buses, Buses, and Coaches:
- Kshs. 60 per passenger capacity per month, subject to a minimum of Kshs. 2,400 per year.
These rates are outlined by the Kenya Revenue Authority (KRA).
Payment Process:
To pay Advance Tax:
- Access iTax Portal:
- Log in to the iTax portal using your PIN and password.
- Initiate Payment:
- Navigate to the ‘Payments’ tab and select ‘Payment Registration.’
- Enter Details:
- Under ‘Tax Head,’ choose ‘Income Tax.’
- For ‘Tax Subhead,’ select ‘Advance Tax.’
- Choose ‘Self-Assessment Tax’ as the ‘Payment Type.’
- Select the relevant ‘Tax Period’ from the dropdown menu.
- Generate Payment Slip:
- After entering the necessary details, generate a payment slip.
- Make Payment:
- Use the payment slip to pay the tax through authorized banks or mobile money platforms.
Detailed steps are provided by the KRA.
Exemptions:
Certain vehicles are exempt from Advance Tax, including:
- Vehicles registered in the name of public institutions and organizations.
- Vehicles used exclusively for agricultural purposes.
Public institutions must provide appropriate evidence of their exemption status to the Commissioner.
Recent Updates:
The Finance Act 2023 introduced changes to Advance Tax rates:
- Vans, Pick-ups, Trucks, Prime Movers, Trailers, and Lorries:
- Increased to Kshs. 2,500 per ton of load capacity per year or Kshs. 5,000, whichever is higher.
These changes are part of the government’s efforts to enhance revenue collection.
Key Points:
- Advance Tax is a prepayment and is offset against the total income tax liability.
- Timely payment is essential to avoid penalties and ensure compliance.
- Stay updated with any legislative changes affecting tax rates and obligations.
For comprehensive information and updates, refer to the Kenya Revenue Authority’s official website.
This is a tax paid in advance before a public service vehicle or commercial vehicle is licensed at the rates applicable.
What are the tax rates for advance tax?
- For vans, pick-ups, trucks, prime movers, trailers and lorries; Kshs. 1,500 per ton of load capacity subject to a minimum of Kshs. 2,400 per year of income;
- For saloons, station-wagons, mini-buses, buses and coaches; Kshs. 60 per passenger capacity per month subject to a minimum of Kshs. 2,400 per year of income.
Is advance tax a final tax?
Advance tax is not a final tax. Taxpayers who have paid any advance tax are required to declare the same in their income tax returns submitted yearly and pay any additional tax due.
When is it due?
It is due on 20th of January or before transfer of ownership of vehicle.
