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Address
304 North Cardinal St.
Dorchester Center, MA 02124
Work Hours
Monday to Friday: 7AM - 7PM
Weekend: 10AM - 5PM
Turnover Tax (TOT) is a tax regime designed to simplify tax compliance for small and medium-sized businesses in Kenya. This tax is especially beneficial for those whose income is within a specific range, offering a simplified tax structure with lower rates and minimal record-keeping requirements.
If your business falls within the threshold, our firm, Junyan and Associates, can assist you in filing and paying your turnover tax promptly and accurately. In this guide, we explain what turnover tax is, the eligibility criteria, benefits, and the process of filing and paying TOT in Kenya.
Turnover Tax (TOT) is a tax imposed on businesses whose annual gross turnover exceeds Kshs. 1,000,000 but does not surpass Kshs. 25,000,000. This tax is governed by Section 12 (C) of the Income Tax Act (CAP 470) and is designed to ease the tax burden on small and medium-sized businesses by simplifying compliance.
As of July 1, 2023, following the Finance Act 2023, the TOT rate is set at 1.5% of gross sales. It is a final tax on the gross turnover, meaning no deductions for expenses are allowed under this regime.
Any resident individual or corporate entity whose gross or expected turnover is between Kshs. 1,000,000 and Kshs. 25,000,000 per year qualifies for TOT. However, a person may opt-out of TOT by notifying the Commissioner in writing. In such cases, the individual or business must comply with other provisions of the Income Tax Act, including filing regular tax returns.
If a business registered for turnover tax deals in vatable supplies and has an annual turnover exceeding Kshs. 5,000,000, they must also register for VAT.
Exemptions Under Turnover Tax
There are certain exemptions where TOT does not apply, including:
Filing and paying TOT is straightforward. You can do it through the iTax platform provided by the Kenya Revenue Authority (KRA). Here’s how:
To register for Turnover Tax, follow these steps:
After registering, you must file your TOT returns monthly, following these steps:
The due date for filing and paying TOT is the 20th of every month following the end of the tax period. For example, the TOT for January must be filed and paid by February 20th.
Penalties for Late Filing and Payment
Late filing and payment of TOT attract penalties and interest, as follows:
To avoid penalties and ensure timely compliance, Junyan and Associates offers comprehensive TOT filing services, ensuring that you meet all your tax obligations accurately and on time.
The TOT regime offers several advantages for businesses:
At Junyan and Associates, we specialize in helping businesses comply with tax regulations, including the Turnover Tax. We offer personalized services to guide you through every step of the registration, filing, and payment process.
Our team is highly experienced in handling tax issues and is committed to providing you with accurate and timely services. Whether you are a small business owner, freelancer, or a growing enterprise, we can ensure that your TOT filings are handled professionally and in accordance with Kenyan tax laws.
By choosing us as your tax consultant, you will benefit from:
Turnover Tax (TOT) is a tax imposed on businesses with an annual gross turnover exceeding Kshs. 1,000,000 but not more than Kshs. 25,000,000. It is payable at a rate of 1.5% of gross sales and is a final tax on income.
Any resident individual or company whose gross turnover falls between Kshs. 1,000,000 and Kshs. 25,000,000 per year is required to register and pay TOT. However, individuals or businesses earning more than Kshs. 5,000,000 must also register for VAT.
TOT must be filed and paid by the 20th of the following month after the tax period ends. For instance, the TOT for January must be filed and paid by February 20th.
Late filing of TOT returns attracts a penalty of Kshs. 1,000 per month, while late payment incurs a 5% penalty on the unpaid tax and 1% interest per month on the outstanding tax.
No, TOT is calculated on the gross sales of the business, and no deductions or expenses are allowed. TOT is considered a final tax.
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