Learn about the Top 10 Taxes In Kenya, including income tax, value-added tax (VAT), pay-as-you-earn (PAYE), excise duty, customs duty, corporate tax, withholding tax, capital gains tax, stamp duty, and betting and gaming tax. Understand the rates, collection methods, and payment requirements for each tax. Stay informed about Kenyan tax laws and regulations to ensure compliance and avoid penalties. Consult with a tax professional for expert guidance in navigating the complexities of the Kenyan tax system.
Taxes in Kenya are categorized under two main heads, direct and indirect taxes. The indirect statutory taxes in Kenya apply when the purchase of goods is made. The various taxes under this banner are excise duty, customs duty & levies, and V.A.T. On the other hand, income tax falls under the direct taxes in Kenya.
When it comes to taxes, Kenya has a wide range of levies that are imposed on individuals and businesses. These taxes play a crucial role in funding government programs and services. In this article, we will explore the top 10 taxes in Kenya and provide a brief overview of each.
1. Income Tax
Income tax is a tax levied on an individual’s income. It is one of the most significant sources of revenue for the Kenyan government. The tax rates vary depending on the income bracket, with higher earners paying a higher percentage of their income as tax.
2. Value Added Tax (VAT)
VAT is a consumption tax levied on goods and services at each stage of the supply chain. It is charged at a rate of 16% in Kenya. VAT is collected by registered businesses and remitted to the Kenya Revenue Authority (KRA) on a monthly basis.
3. Pay As You Earn (PAYE)
PAYE is a tax deducted from the salaries of employees by their employers. It is a progressive tax, meaning that the more an individual earns, the higher the percentage of tax they pay. The employer is responsible for deducting and remitting the tax to the KRA.
4. Excise Duty
Excise duty is a tax imposed on certain goods such as alcohol, tobacco, and petroleum products. The rates vary depending on the type of product. Excise duty is levied at the point of production or importation.
5. Customs Duty
Customs duty is a tax imposed on goods imported into Kenya. The rates vary depending on the type of goods and their value. Customs duty is collected by the Kenya Revenue Authority at the point of entry.
6. Corporate Tax
Corporate tax is a tax levied on the profits of companies registered in Kenya. The tax rate for resident companies is 30%, while non-resident companies are subject to a rate of 37.5%. Corporate tax is payable annually.
7. Withholding Tax
Withholding tax is a tax deducted at the source of income. It is applicable to payments such as dividends, interest, royalties, and rent. The rates vary depending on the type of income and the residency status of the recipient.
8. Capital Gains Tax
Capital gains tax is a tax imposed on the profit made from the sale of assets such as land, buildings, and shares. The tax rate is 5% for individuals and 20% for companies. Capital gains tax is payable at the time of transfer of the asset.
9. Stamp Duty
Stamp duty is a tax imposed on certain legal documents such as agreements, contracts, and property transfers. The rates vary depending on the type of document. Stamp duty is payable upon execution of the document.
10. Betting and Gaming Tax
Betting and gaming tax is a tax imposed on the revenue generated from betting and gaming activities. The tax rate is 15% of the gross gaming revenue. Betting and gaming companies are required to file monthly returns and remit the tax to the KRA.
These are just a few of the taxes that individuals and businesses in Kenya are required to pay. It is important to stay informed about the tax laws and regulations to ensure compliance and avoid any penalties or legal issues. Consulting with a tax professional can also be helpful in navigating the complexities of the Kenyan tax system.
