Kenyan Taxes

Types of taxes on the KRA portal

A tax return is a money-filed information report that provides details on income derived individuals earn from businesses, rent, and dividends, only to mention a few.

This type of filing should be done with by 30th of June of every year. We are all about taking you on your tax return filing journey as follows;

  • Importance of filing tax returns
  • Types of tax returns to file for KRA.
  • Guide on you can file your tax returns on iTax
  • How to file tax returns using the P9 form
  • Conclusion

You can start filing your returns as early as possible to avoid the last minute rush. With iTax, the filing process has been simplified with easy navigation instructions through the system. Filing returns helps taxpayers to be able to calculate, refund and request overpayment of their taxes. Failure to file these returns would attract penalty charges for every person responsible by the Kenya Revenue Authorities.

Filing returns is a mandatory obligation duty for all Kenyans across the world. The government of Kenya states that any individual working and earning a specific amount of money, must file for a tax return on a particular set date.

Many think filing returns is a voluntary act and would choose not to engage, but this activity helps one to be a law abiding citizen. The government must know the means of expenditure acquired from its citizens and be able to provide an assessment platform for claims, among other services needed. This article teaches us more about filing taxes and answers some of the most asked questions.

Importance of filing tax returns

We have so many reasons why you should file your returns and they include the following;

  1. It is a legal requirement set by the law of Kenya according to section 52B of the income tax. It states that every person earning an income of more than Ksh 24,000 must file for a tax return.
  2. Filing returns helps you keep track of your tax payments, whether they are taxes due or payable, and allows you to file for nil returns if you do not have any income in the same year.
  3. Filing returns in an employment sector enables employees to get deducted by the KRA under the Pay As You Earn income (PAYE) system, which can calculate and make deductions for them at the end of the year.

Types of tax returns to file for KRA. 

  1. Turnover Tax (TOT) 

It’s a tax charged on businesses based on their gross sales. The charge was made effective as of 1st January 2020. Please read our blog on Turnover Taxes for more insights about TOT and how it works.

  1. Value Added Tax (VAT) 

It’s a tax charged by companies and businesses whose annual revenue exceeds 5M on supplies made on goods or services provided in Kenya.  You can also read more on VAT for a better understanding from our blog.

  1. Rental income tax 

It’s a tax charged on income received by landlords and landladies from properties they own. It can be charged depending on how the houses are used, which can be for residential or commercial purposes.

  1. Agency revenue

 It’s a tax collected by KRA on behalf of agencies. It consists of stamp duty whereby collection is done by the ministry of lands on properties, shares and stocks, and betting tax which is collected from the lottery, betting and businesses.

  1. Excise duty 

It’s a tax return charged on made in Kenya goods and imported items brought into the country. The goods can be gadgets such as phones and tablets, among other types made.

  1. Capital gain tax 

It’s imposed on companies or individuals upon transferring properties in the country and was made effective as of 1st January 2015.

  1. Income tax return

 It applies to residents and non-resident persons living in the country. It is directly deducted from businesses, employment, and dividend, among many other sources of income an individual earns from. It can be collected in the following ways;

  • Pay As You Earn (PAYE)

This is whereby the government deducts from individuals who work in employment sectors that are supportive of workers. These profits include bonuses, fees, lieu of leaves, and traveling, among others, earned from companies due to services rendered.

  • Withholding tax 

It’s a tax charged to individuals making payments by deducting a certain amount of tax and sending it to the commissioner on behalf of their recipients. Examples include consultancy fees, royalties, and entertainment fees, among others. This tax is usually deducted on the 20th month of the following month in which the tax was deducted.

  • A corporation tax 

 It’s an income tax for companies and other corporate bodies. They can be companies within or outside Kenya, and they get to pay their taxes every year.

  • Advance tax 

This is a type of income tax required to be paid in advance by public service vehicles before checking in for their yearly inspection.

  • Installment tax 

It’s an income tax paid for if your taxes payables are Kshs 40,000 and above based on any year acquired.

Guide on you can file your tax returns on iTax

Anyone who owns a KRA pin should consider filing for their returns, whether they are earning or not. If you need help finding directions on filing your returns, you can contact the KRA customer support for assistance to avoid mistakes. 

It is always important to file your returns in order to protect yourself from paying extra charges in terms of penalties. Filing for returns should be something other than a piece of work, provided you have all your papers in place.

 If you are employed, you can file for your returns under the employment form, which has your work details already submitted by your employer to the KRA. Let's look at the simple steps you must take to file for your returns. 

  1. With your pin, log in on your iTax KRA portal, whereby you will be required to fill in your pin number and password with a simple maths calculation.
  2. Click on return and select e-returns, whereby you'll be advised to download the zipped excel form to your computer and unzip the folder.
  3. On the excel sheet, enable macros( if it's disabled) to fill in your data. Such as your pin number, date, and return period you want to file.
  4. Select the type of tax file you want. Ensure that you have opened a relevant form you are supposed to file.
  5. Click on next, whereby you will be required to fill in your employment income details to be deducted from your taxes.
  6. After filling in your information, towards the end, you will be required to click on validate. A popup message will ask you whether you want to generate the initially uploaded folder, click yes to download the zipped form.
  7. Check back on your KRA portal to fill in your tax period, then tick on the box to show that you agree with the KRA terms and conditions. Click submit and you will be asked whether you want to upload your zip form, click yes.
  8. You will be given an e-receipt with your acknowledgment number to prove that you have filed for your returns.

For visuals, feel free to check out this video on how to file tax returns on the KRA portal online.

How to file tax returns using the P9 form

You might be aware of the P9 form if you are employed. You can file your returns using a P9 form acquired from your employer.

With a few simple steps, you will be able to file for your taxes online and this is how;

  1. Login to your KRA portal and sign in with your user KRA pin and password.
  2. On the iTax portal and select return, whereby you will go with the e-return option.
  3. Click on the return button in the select your obligation menu, whereby you will select income tax resident individual.
  4. Download the zipped individual income tax form and unzip the form then save it on your computer.
  5. Fill in the document based on the tax obligation you are filling in with your details, including your tax computations, PAYE, and income to be deducted. Your details are also important at this point, then click on the validate button on the excel sheet.
  6. Click validate and you will be required to upload the downloaded form then click the submit button.
  7. After completing these processes, you will download the acknowledgment receipt.

You can read more about the P9 form from the KRA platform for a better understanding. 

Conclusion

It is always important to file for tax returns, it doesn't matter if you are employed or not, but once you reach 18 years of age, you will be obliged to do the necessary. It is not only important to file for them but also if you need help deciding what to take, you can always seek guidance from the Kenya Revenue Authorities management and you will be directed as required. Filing for returns is easier than it seems, and with a few steps to follow, you will be set.

NOTE: Here's an awesome YouTube short video you can use for reference when it comes these types taxes.

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