Pay As You Earn (P.A.Y.E)

Pay-As-You-Earn (PAYE)

Pay-As-You-Earn (PAYE) is a method of collecting tax from individuals in gainful employment, in Kenya.

Kenya PAYE 2018 Rates

Pay-As-You-Earn (PAYE) is a method of collecting tax from individuals in gainful employment, in Kenya. Gains or Profits includes wages, casual wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, gratuity, or subsistence, travelling, entertainment or other allowance received in respect of employment or services rendered.

If you are an employer, you are required to register for this obligation by getting a KRA PIN. All employees are also required to apply for a PIN too from KRA.

As an employer you are required to deduct PAYE from your employees’ salaries and wages at the prevailing rates and remit the same to KRA on or before the 9th of the following month.

We have highlighted below the tax bands and rates effective Jan 2018 on a monthly basis:

 

Monthly income (Kshs) Tax rate Cumulative tax per month
0 – 11,180 10% 1,118
11,180 – 21,714 15% 2,698
21,714 – 32,248 20% 4,805
32,248 – 42,781 25% 7,439
42,741 and above 30%
Monthly tax relief 1,280

Individual Income Tax

Individual Income Tax

17/02/2020
The balance of tax should be paid on or before 20th of April of the following year
Returns are filed on or before the 30th of June.

Withholding Value Added Tax

Withholding Value Added Tax

28/08/
The tax is deducted by appointed withholding Tax Agents from their suppliers at 6%, at the point of payment and remitted on or before the 20th day of the following month.

Withholding Tax (WHT)

Withholding Tax (WHT)

This is a tax that is deductible from certain classes of income at the point of making a payment, to non-employees and submitted to the Authority in charge of tax.

Withholding Tax (WOT)

This is a tax that is deductible from certain classes of income at the point of making a payment, to non-employees and submitted to the Authority in charge of tax. WHT is deducted at source from the following sources of income:

  • Management or professional fees (including consultancy, agency or contractual fees)
  • Interest
  • Dividends
  • Royalties
  • Commissions
  • Pensions
  • Rent received by non-residents
  • Other payments specified

Companies and partnerships making the payment, are responsible for deducting and remitting the tax to the Commissioner of Domestic Taxes at KRA. The amount deducted various between incomes, depending on whether one is a resident or a non-resident. The table below analyses some of the rates for WHT: 

Income source Resident Non-resident
Management/professional  fees 5% 20%
Training fess (inclusive of incidental costs) 5% 20%
Dividends (nil for resident shareholders with>12.5%) 5% 10%
Pensions/provident schemes (withdrawal) 10-30% 5%
Insurance Commissions 10% 20%

Residential Income Tax

Residential Income Tax

Charged on residential property owners at 10% of gross rent above 144,000 and below 10,000,000 Annually. Returns are filed and tax payable before the 20th of the following month.

Turn Over (TOT)

Turn Over Tax (TOT)

17/02/2020
Returns are filed and tax due paid monthly on or before the 20th day of the following month.

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