2020 TAX COMPLIANCE CALENDER
Pay As You Earn (P.A.Y.E)
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
Withholding Value Added Tax
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. WHT is deducted at source from the following sources of income:
- Management or professional fees (including consultancy, agency or contractual fees)
- 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:
|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%|