If you run a small business in Kenya, you must understand how to pay presumptive tax in Kenya to avoid penalties and stay compliant. This tax targets small traders with a turnover below KSh 5 million.
It links directly to your business permit or trade license, which means you pay it when you apply for or renew your license. Many business owners miss deadlines or follow the wrong steps, which leads to fines.
This guide breaks down the process clearly so you can pay on time, avoid penalties, and keep your business running smoothly.
Step-by-Step Guide On How To Pay Presumptive Tax In Kenya
Presumptive tax in Kenya applies to resident individuals running small businesses. The Kenya Revenue Authority collects this tax through its online platform, iTax.
You must pay the tax when you obtain or renew your business permit from your county government.
Key facts you must know before paying
- Who should pay
- Residents with business turnover not exceeding KSh 5 million annually
- Individuals issued or required to have a business permit or trade license
- Who is exempt
- Persons with valid tax exemption certificates
- Businesses that opt out in writing to the KRA Commissioner
- Businesses earning above KSh 5 million annually
- Income from rental, professional services, or incorporated companies
- Tax rate
- 15% of the business permit or trade license fee
Step-by-step process to pay presumptive tax
Follow these steps carefully to complete your payment:
- Log in to your iTax account
- Click on Payment Registration
- Select Presumptive Tax as the tax type
- Fill in all required details correctly
- Generate a Payment Registration Number (PRN)
- Choose your preferred payment method
Payment options available
You can complete your payment using:
| Payment Method | Details |
|---|---|
| M-Pesa | Paybill Number 572572, use PRN as account number |
| Bank | Any KRA-appointed partner bank |
| Online banking | Available through selected banks |
Make sure you enter the PRN correctly. A wrong entry can delay or misdirect your payment.
Common mistakes to avoid when paying presumptive tax
Many small business owners make avoidable errors. Stay sharp and avoid these:
- Delaying payment until after permit renewal
- Entering incorrect PRN details
- Assuming all businesses qualify for presumptive tax
- Ignoring exemption conditions
- Failing to keep payment records
If you fix these issues early, you save money and avoid unnecessary stress.
Penalties for late payment and how to avoid them
The government does not take late payments lightly. If you miss your deadline, penalties apply under the Tax Procedures Act, 2015.
Here is what you will face:
- Penalty: 5% of the tax due
- Interest: 1% per month on the unpaid amount
These charges add up quickly. You can avoid them by:
- Paying at the time of permit issuance or renewal
- Setting reminders before your license expires
- Keeping your iTax account active and updated
