The first part of this article prioritized the income tax calendar viewed from an annualized position. This second part delves into other tax categories whose key dates are on a monthly basis. The article may not exhaust all other types of taxes but does cover the prominent tax liabilities.
Let’s get to it.
Personnel Based Taxes:
Pay as You Earn (PAYE) is charged on employees’ income but collected by the employer who then remits it to the authority (KRA), on a monthly basis. The tax is charged based on a graduated scale (2021 scale below). The due date for both filing and paying is 9th of the succeeding month. The penalty for late-filing is KES. 10,000 or 25% of tax due whichever is higher and late-payment penalty is 5% of tax due and interest of 1%.
‘Income Tax Act; Section 37’.
Withholding Taxes are charged by the authority (KRA) but collected by the person making the payment who then remits to the authority. WHTs are collected from consultancy services, professional services, interest, royalties, dividends, qualifying dividends, commissions amongst others. PAYE is also a form of withholding tax. Different rates apply for the different withholding services. The due date for Withholding Taxes is 20th of the succeeding month. Late payment penalty is 5% of the tax due.
‘Income Tax Act: 35 (5 a and b) and Third Schedule: Head B (5)’.
Income Bases Taxes:
Turnover Tax is charged on total sales value at a rate of 1%. The tax was reintroduced through the Finance Act 2019 and Tax Laws Amendment Act 2020, as an option for businesses whose annual turnover is more than KES 1,000,000 but does not exceed KES. 50,000,000. Turnover tax is due on or before 20th of the succeeding month.
‘Tax Laws Amendment Act: Sec 2, 12C (1)’.
Value Added Tax is charged by entities making vatable commodities whose annual turnover is KES. 5,000,000 or more. There are different rates; standard rate (16%), special rate (8%) and zero rate (0%). Supplied on which VAT is not charged are classified as exempt supplies. A person registered for VAT is expected to file their VAT returns on or by 20th of the succeeding month. This is usually the net of output VAT (VAT charged to customers) and input VAT (VAT charged by suppliers). Penalty for late filing is KES. 10,000 or 5% whichever is higher, late payment penalty is 5% with interest of 1%.
‘VAT Act: Sec 34’
Monthly Rental Income Tax was introduced through the Finance Act 2015, 2016 with the latest amendment in the Finance Act 2020. This option is available to landlords earning residential rent income of KES. 288,000 but not exceeding KES. 10,000,000 in that month. It is charged at a rate of 10% of the gross rent collected from residential use property. This is a final tax, charged monthly with due date of 20th of the succeeding month. Penalty for late filing is KES. 2,000 (for individuals), KES. 20,000 for non-individuals or 5% whichever is higher, late payment penalty is 5% with interest of 1%.
‘ITA : Sec 6A, 35(j), Schedule III; Head B’
