TURNOVER TAX.cdr - Kenya Revenue Authority

• Submission of a return without payment of the
tax due also attracts a default penalty of
Kshs.2000/=.
• Unpaid tax attracts interest at the rate of 2% per
month.
DE-REGISTRATION
• A person whose income from business falls
below Kshs.500,000/= in a year of income
shall apply to the Commissioner for
deregistration.
• Where the income from the business of a
person exceeds Kshs.5 million during a year of
income, that person shall notify the
Commissioner of the change of status.
Note: The approval granted by the
Commissioner shall be effected in the subsequent
year of income.
OBJECTIONS AND APPEALS
• The taxpayer has a right to object to any
assessment issued by the Commissioner.
• Objections and appeals shall be dealt with in
accordance with the provisions of the Income
Tax Act-Cap 470 Laws of Kenya.
KENYA REVENUE AUTHORITY
Disclaimer:
This information is form guidance only, and is subject
to changes when the law is amended.
Any omission does not absolve the taxpayer
from making true and correct returns
and statements of Accounts.
For further information
Please visit the nearest KRA office
or
Contact: Taxpayer Education Programme
on
Tel:020 2812010/2816095/2813079/2812013
or
KRA Contact Centre Tel: 4999999
DOMESTIC TAXES DEPARTMENT
HEAD OFFICE
Times Tower Building 19th Floor
Haile Sellasie Avenue
P.O. Box 30742 - 00100
Tel.310900
Website:WWW.kra.go.ke
KRA Online services portal:
http//www.kra.go.ke/portal
ISO 9001:2008 CERTIFIED
DOMESTIC TAXES DEPARTMENT
TURNOVER TAX
TURNOVER TAX
2011 / 2012
DMG/DGW/Revised on 1st August, 2011

WHAT IS TURNOVER TAX (TOT)?
• Turnover Tax was introduced by the Finance Act
2006.
• Turnover tax means tax payable under Section
12C of the Income Tax Act Cap 470.
• The tax shall be applicable to any resident
person whose turnover from business exceeds
Kshs.500,000/= but does not exceed Kshs. 5
million during any year of income.
Note: Business includes any trade, profession or
vocation, and every manufacture, adventure and
concern in the nature of trade, but does not
include employment.
• The effective date of implementation of
Turnover tax was 1st January 2008
• TOT is charged at the rate 3% on gross sales
• For income tax purposes, TOT is a final Tax.
• No expenditure or capital allowance shall be
granted against turnover tax.
• Turn over tax does not apply to:-
(i)
(ii)
Any person whose annual income is
exempt from tax under the First Schedule
of the Income Tax Act.
Any person whose income is subject to
withholding tax as a final tax such as
interest and dividends received by
individuals.
(iii) Any person whose annual income from
b u s i n e s s d o e s n o t e x c e e d
Kshs.500,000/=
(iv)
(v)
(vi)
Limited companies
Rental income
Professional or management fees or
training fees
REGISTRATION
• All taxpayers whose gross sales from business is
b e l o w K s h s 5 m i l l i o n b u t e x c e e d s
Kshs.500,000/= per year are registrable.
• Application for registration shall be done
through the KRA online services portal,
www.kra.go.ke/portal.
• For TOT purposes, "person" includes
partnerships.
Note: A person may elect not to be subject to
TOT. However, taxpayers who prefer to remain in
the normal tax regime shall apply in writing to the
Commissioner.
RECORDS
The TOT registered taxpayers shall maintain the
following records:-
• Cash books
• Sales receipts and invoices.
• Daily sales summary (TOT 4)
• Purchases invoices
• Bank statements
RATE OF TAX
• TOT is charged at the rate of 3% on gross sales
of the business per annum
• No personal relief granted.
TAX PERIOD
For TOT purposes, tax period means every 3
calendar months commencing 1st January of
every year.
BENEFITS OF TURNOVER TAX
• Simplifies the tax procedure
• Simplifies tax computation
• Simplifies record keeping
• Makes returns filing easier
• Reduces cost of compliance
RETURNS AND PAYMENTS
• The TOT taxpayer shall submit a quarterly
return. The return shall be on a prescribed form
TOT 3
• TOT 3 also doubles as a pay in slip.
• Payment shall be made on or before the 20th
day of the month immediately following end of
the quarter.
Note: A person may remit tax due on monthly
basis and offset the tax paid in the tax return.
• Payment shall be made through banks
appointed by the Commissioner of Domestic
Taxes which include National Bank of Kenya,
Kenya Commercial Bank and Co-operative
Bank of Kenya.
• Payment will be made by cash, cheques or
electronic funds transfers.
• TOT taxpayers are advised to register as KRA
online services users to enable them
a c c e s s t h e K R A o n l i n e s e r v i c e s
portal.www.kra.go.ke/ portal
PENALTY AND INTEREST
• Failure to submit a TOT return by the due date
(i.e 20th day of the month following the
quarter) is liable to a default penalty of
Kshs.2000.
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