If you run a small or medium enterprise (SME) in Kenya, navigating standard corporate tax can be incredibly complex. To support small business owners, the Kenya Revenue Authority (KRA) offers a simplified tax framework called Turnover Tax (TOT).
What is Turnover Tax? TOT is calculated directly on your gross monthly sales instead of net profits. This means you do not need complex ledger frameworks to figure out what you owe.
Who is Eligible? Your business qualifies if it earns more than KSh 1,000,000 but less than KSh 25,000,000 in gross annual sales, and holds a resident status within Kenya.
Key Exemptions: Even if your business falls into the revenue bracket, some income types are excluded from TOT because they are covered under separate laws: Employment income, Rental income, and Professional/Management fees.
The Rules: The tax is standardized at 3% on gross sales. You must file your TOT return and pay the tax via the iTax portal on or before the 20th day of the following month. If you had no sales, you must file a Nil Return or face an automatic KSh 1,000 penalty.
