Financial titbits: The most common taxes in Kenya

The word tax tends to be intimidating to many, especially because words and phrases such as ‘penalties’ and ‘the government will find you’ are associated with it.

As long as you do your due diligence as a citizen, though, and pay your taxes on time, there is nothing to worry about.

First, you have to be at least 18, with a National ID to prove it. To be safe, it is important to know the most common taxes in Kenya:

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PAYE (Pay as you earn) is a method of collecting tax at source from individuals in gainful employment. The employer deducts a certain amount of tax from their employee’s salary or wages on each payday then remit the tax to the authority. This relieves the employee from paying taxes at the end of the year and shifts the responsibility to the employers.

Everyone who receives income is given tax credit or a tax relief from KRA known as Personal Relief. Insurance Relief and Mortgage Relief are also available for eligible persons. The total tax credit is spread evenly during the charge year. At the end of the year, one will submit his self-assessment on total income received from various sources. Should the tax credit be lower than tax charged during the year, the balance of tax due will be payable.

Corporation tax is a form of income tax levied on companies. Resident companies are taxed at a rate of 30 per cent while non - resident companies are taxed at 37.5 per cent of their income.

Withholding taxes are deducted at source from the following sources of income: Interest, dividends, royalties, management or professional fees, commissions, pension or retirement annuity, rent, appearance or performance fees for entertaining, sporting or diverting an audience.

Advance tax is applicable to Matatus and other Public Service Vehicles. It is not a final tax, but a tax partly paid in advance before a public service vehicle or a commercial vehicle is registered or licensed.  

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PAYECorporation taxWithholding taxesAdvance taxTaxKRA