This is a step by step guide on how to file Turnover Tax (TOT) in Kenya. Turnover Tax is a tax charged on gross sales of a business as per Section 12 (c) of the Income Tax Act.
TOT was first introduced vide Finance Act 2006, replaced by Presumptive Income Tax vide Finance Act 2018 then reintroduced vide Finance Act 2019.
Turnover Tax is payable by resident persons whose gross turnover from business is more than Kshs 1,000,000 and does not exceed or is not expected to exceed 50,000,000 in any given year. It does not apply to the following;
- Persons with business income below Kshs 1,000,000 and above Kshs 50,000,000 per annum.
- Rental income.
- Management, professional and training fees.
- Any income that is subject to a final withholding tax under the Income Tax Act.
TOT should be filed and paid on a monthly basis. The due date is on or before 20th of the following month.
Rate for Turnover Tax
- Turnover Tax is charged at the rate of 1% on gross monthly sales.
- Expenses are not deductible.
- This is actually a final tax.
Penalty for non-compliance
- TOT late filing penalty is Kshs 1,000 per month.
- Late payment penalty is 5% of the tax dues.
- Interest on unpaid tax is 1% of the principal tax due.
How To File Turnover Tax Return
1. Log in to iTax via https://itax.kra.go.ke/KRA-Portal/.
2. Under the return menu, select file return, then turnover tax.
3. Download the excel return.
4. Complete the return and submit.
5. After filing the return, go to the payment menu.
6. Select payment then amount payable and generate a payment slip.
7. Make the payment at a partner bank or through Mpesa.
Note: Eligible taxpayers are advised to log in to iTax, add TOT obligation, file monthly returns and make payment.
A taxpayer whose turnover is within the relevant threshold but chooses not to be taxable under TOT, shall be deemed to have informed the Commissioner of this choice by not registering for TOT.
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