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To being with, there are different types of KRA tax returns based on the tax obligation of an individual or the business. The tax structure in Kenya is broadly classified into direct taxes and indirect taxes. Direct tax includes Income tax for businesses, also known as corporate tax and for individuals. Indirect tax consists of Value Added Tax (VAT), Excise Duty and Customs Duty. Based on the type of tax you are obligated to remit, you have to choose the appropriate i iTax returns in KRA portal.
The following are the different types of iTAX KRA online returns.
Let us understand each of the above KRA return forms in Kenya.
This KRA tax return is applicable to all the resident individuals who are taxed on the whole income earned in respect of any employment or services rendered in Kenya or outside Kenya. This also include any other income that has accrued in or derived from Kenya.
To file returns, the resident individual need to select ‘Income Tax - Resident Individual’ from the KRA tax return types in the iTax online portal.
For Non-resident taxpayers, the income earned from within Kenya or derived from Kenya is taxable. A Non-Resident Individual need to select ‘Income Tax – Non-Resident Individual’ from the KRA tax return types in KTA online returns.’
The type of income tax levied on corporate bodies is known as a corporate tax. This will be levied on corporates such as limited companies, trusts and co-operatives. The resident companies are taxable at the rate of 30% while non-resident companies are taxable at the rate of 37.5% on their taxable profits.
To file the returns in KRA iTax Online portal, these companies need to select ‘Income Tax – Company’ in the type of KRA tax returns.
Partnership income is not taxable for Income Tax purposes. This is because, the share of partnership income is taxable in the hands of the partner at the prevailing individual income tax rates. In other words, the income is not taxable at the entity level, instead, it is taxed in the hands of individual partners.
Though the income is not taxed at the entity level but as a partnership firm, you need to file a separate partnership return. To file partnership return, you need to select’ Income Tax – Partnership’ in KRA iTAX return menu.
PAYE stands for ‘Pay as You Earn’. It is a method of tax deduction by employer on employee’s salaries or wages and applies to all income from any office or employment. It applies to weekly wages, monthly salaries, annual salaries, bonuses, commissions…etc.
The tax deducted should be paid on monthly basis and employer need file a return disclosing the details of tax deducted. To file iTax PAYE returns, you need to select the ‘Income tax – PAYE’ in types of KRA iTax returns.
In order to provide a simpler compliances for small business, the government has introduced a tax scheme known as ‘Turnover Tax’. This is applicable for businesses whose income from the business is above KSh 500,000 but does not exceed 5,000,000. The businesses opting turnover tax need to pay tax at a fixed rate on gross income earned by them.
If you are business paying tax under turnover tax scheme, you need to select ‘Income Tax – Turnover Tax’ in KRA tax return menu in order to file your iTax returns online.
All the businesses with KSh 5,000,000 or more in last 12 months or anticipates to attain the KSh 5,000,000, are mandated to register under VAT. The Act also provides for voluntary registration where a taxpayer chooses to register despite the turnover falling below Kshs.5,000,000.
All the VAT Registered businesses are required to declare the details such as VAT charged on sales, VAT paid on purchased etc. by filing monthly VAT return by 20th of the subsequent month. To file VAT return in Kenya, you need to select ‘VAT Returns’ in iTax tax return menu.
In Kenya, the Excise duty is imposed on notified goods manufactured or imported into Kenya. There are different excise duty rates depending on the product imported or manufactured. The details of excise duty levied should be declared in monthly excise return on before 20th of the subsequent month. To file iTax excise return, you need to select ‘Excise’ in KRA tax return type.