In this blog post, I am going to share with you the KRA Tax Obligations For Individuals In Kenya. Get to know the 4 tax obligations for individuals in Kenya.
The core purpose of this blog post is to let you understand the 4 tax obligations for individuals in Kenya i.e Income Tax Resident, Income Tax Non Resident, Income Tax PAYE (for Employer only) and Value Added Tax.
Individual in this context refers to “relating to one person (a single human, rather than to a large group).” So Tax Obligation for Individuals means the obligation set for that person.
- What Tax Obligation is in relation to Kenya Revenue Authority (KRA)
- What the KRA Tax Obligations for Individuals are.
- The important dates of returns submission of those KRA Tax Obligations
What is a Tax Obligation?Let us begin by defining what a Tax Obligation is. A tax obligation simply means “the liability of tax that one has.” A tax liability is the total amount of tax debt owed by an individual, corporation or other entity to a taxing authority i.e Kenya Revenue Authority (KRA).
It is the total amount of tax you’re responsible for paying to the taxman. In Kenya today, a tax obligation for individuals can either be the Income Tax Resident, Income Tax Non Resident, Income Tax PAYE (for Employer only) and Value Added Tax.
What are the KRA Tax Obligations for Individuals?While applying for the KRA PIN, you will be required to select a tax obligation. The KRA Tax Obligations for Individuals can be grouped into four: Income Tax Resident, Income Tax Non Resident, Income Tax PAYE (for Employer only) and Value Added Tax. We are goin to look at each one of them below.
Tax Obligation 1: Income Tax ResidentThis tax obligation is for all residents in Kenya. This is the default tax obligation for all Kenyan resident individuals. This is a compulsory obligation that applies to all residents in Kenya. All Kenyans under this obligation are supposed to file their returns by 30th of each year. This applies to both employed (File Employment Returns) and unemployed (File Nil Returns).
Tax Obligation 2: Income Tax Non ResidentThis tax obligation is for non residents residing in Kenya. This is a compulsory obligation that applies to all non residents in Kenya. Any amount paid to Non-Resident individuals in respect of any employment with or services rendered to an employer who is resident in Kenya or to a permanent establishment in Kenya is subject to income tax charged at the prevailing individual income tax rates. Non Residents are however not entitled to any personal relief.
Tax Obligation 3: Income Tax PAYE (for Employer only)This tax obligation is for employers only who remit PAYE (Pay As You Earn) on behalf of their employees every month. Income Tax PAYE applies only to employers in Kenya. PAYE is a method of collecting tax from individuals in gainful employment in Kenya.
Gains or Profits includes wages, casual wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, , or subsistence, travelling, entertainment or other allowance received in respect of employment or services rendered.
If you are an employer you are required to register for this obligation. All employers in Kenya are required to deduct PAYE from your employees salaries and wages at the prevailing rates and remit the same to KRA on or before the 9th of the following month.
Tax Obligation 4: Value Added TaxThis tax obligation applies to suppliers of taxable goods and services. VAT (Value Added Tax) is charged on supply of taxable goods or services made or provided in Kenya and on importation of taxable goods or services into Kenya.
If you are registered for VAT you will be required to account for VAT charged on your taxable supplies through online monthly returns and pay any VAT due. VAT returns are due on or before 20th of the following month.
It is important to note that VAT tax is due and payable when;
- Goods or services are supplied to the purchaser
- An invoice is issued in respect of the supply
- Payment is received for all or part of the supply
- A certificate is issued by an architect, surveyor or any person acting as consultant or in a supervisory capacity in respect of the service (whichever is earliest)
To sum everything the above 4 are the major tax obligations for individuals here in Kenya. Stay tuned for the Part 2 of this blog post whereby we shall be sharing about KRA Tax Obligations for Non Individuals in Kenya.
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Matthews Ohotto is a holder of Second Class Honours Upper Division Degree in Business Information Technology (Bachelor of Business Information Technology – BBIT) from Jomo Kenyatta University of Agriculture and Technology (JKUAT). He is the Founder of both Cyber.co.ke Portal (an online portal that focuses on offering better KRA Services to Kenyans both locally and globally) and Cyber.co.ke Blog.