Every Kenyan Citizen who has a Personal Identification Number (PIN) is required to file their tax returns by law. Individuals who possess a PIN and fail to file their return, are culpable to an interest accruing penalty for every year for which the return is not filed.
Who should have a KRA PIN?
Any Kenyan citizen or Individual/ Entity within Kenya who is employed, has a business, has rental income, wishes to apply for a Higher Education Loan, or intends to perform any transaction within Kenya. A Non-resident Kenyan or a Non-Kenyan resident within or outside Kenya can also apply for a PIN using the requirements provided in the law. A foreign company can also apply for a PIN as a subsidiary.
When are you required to use a KRA PIN
- Land transactions (registration, purchase, transfers, and land rate payments).
- Building construction and trade licences (plans approvals, business permits, and County payments).
- Registration of motor vehicles/ business names/ companies etc.
- Opening a bank account in Kenya, as well as, but not limited to any other bank transactions, KPLC power connections, Water meter connections,
Tax Obligations for Kenyans with a KRA PIN
- Income Tax – This is applicable to both residents and non-residents. Individual Income Tax is required for anyone drawing wages from organizations registered in Kenya, including non-residents (Within the country and those from countries with no double taxation agreement with Kenya). Every Individual with a KRA PIN is required to file an Individual Income Tax Return annually, on or before 30th of June of every year (anytime from 1st January to 30th June of the following year). This submission of returns is done online on the KRA iTAX platform. Kenyans in the diaspora are encouraged to visit any home missions abroad to receive filing support or any other assistance related to their PIN.
- It is important to note that if you do not have an income; it is advisable to file a NIL return. This is especially for students, and senior citizens who are not in gainful employment in the diaspora. Income Tax can be paid by MPESA or through the banks listed on the iTax Online Payment Platform. For support, contact the KRA Support lines.
- Value Added Tax (VAT) - This is what most of Kenyans are conversant with. Value Added Tax is charged on supply of taxable goods or services made or provided in Kenya and on importation of taxable goods or services into Kenya, payable on or before 20th of the following month.
- Pay As You Earn (PAYE) - PAYE is a method of collecting tax from individuals in gainful employment. Employers are required to register for this obligation, and deduct PAYE from their employees’ salaries and wages at the prevailing rates and remit the same to KRA on or before the ninth of the following month. Submission is done online on iTax and payments can be made through MPESA or Bank deposit. Penalties for late filing is 25 percent of the tax due or Kshs.10,000 (whichever is higher) while the penalty on late payment is five percent of the tax due and a late payment of 1% per month on the unpaid tax until the tax is paid in full. More details on VAT are available on this link. d. Residential Rental Income Tax: This is tax payable by resident persons on residential rental income accrued or derived in Kenya where the rent income is between Kshs.144,000 and Kshs.10 million per annum. The rate of tax is 10% on the gross rent received and is payable when property owners receive rent from their tenants either monthly, quarterly, semi-annually or annually. However, returns must be filed on or before the 20th day of the subsequent month. No expenses, losses or capital deduction allowances shall be allowed for deduction from the gross rent.