It is becoming more and more difficult to live and run a business in Kenya. Here is why. As from January 1, 2019, small traders across the country will be required to remit 15% of their single business permit or trading license fee to the county government, Kenya Revenue Authority (KRA) has announced. The presumptive tax targeting all the small business in the informal sector will be collected by the county governments on behalf of KRA and as per the Finance Act, 2018.
In a public notice released on Tuesday, December 4, KRA noted the tax would be paid when acquiring or renewing business permit or trade license at the county level. “The tax shall only apply where the turnover from business is less than KSh 5 million per annum. The tax does not apply to persons engaged in management or professional services, rental businesses and incorporated companies,” the taxman explained.
Public Notice: Stakeholder Sensitization Forums on Presumptive Tax. pic.twitter.com/uGZj4IOJti
— Kenya Revenue Authority (@KRACorporate) December 4, 2018
In order to pay the Presumptive Tax , eligible taxpayers with turnover of between KSh 500,000 and KSh 5 million would be required to register and log onto the iTax. Once logged in, they would be able to generate a Payment Registration Number (PRN) on iTax under the Presumptive Tax Payment. “They can pay through M-Pesa Pay Bill Number 572572 or any other partner bank,” KRA noted.
Presumptive Tax is one of the many taxes the National Treasury had proposed in the Finance Act, 2018, as the government struggled to increase domestic revenue. The new tax will replace the 3% of gross sales that the traders have been paying on quarterly basis. The tax is also likely to push the cost of doing business higher and consequently the cost of living as traders may be forced to pass over the tax burden to the consumers.