What you need to know about Presumptive Tax

Presumptive Tax is chargeable to resident persons whose annual turnover does not exceed sh5 million per year.

It is a simplified tax regime for small and micro enterprises the government introduced as it seeks to capture the elusive sector in the tax bracket and raise more revenues for the Big Four Agenda.

It is applicable to persons who are issued or are liable to be issued with a business permit or trade license by the County Government in any year of income. The rate of Presumptive Tax is only 15 per cent of the amount payable for a single business permit and is not a final tax.

Presumptive taxation involves the use of indirect means to ascertain tax liability, which differ from the usual rules based on the taxpayer’s accounts. The term “presumptive” is used to indicate that there is a legal presumption that the taxpayer’s income is no less than the amount resulting from application of the indirect method.

Payment of Presumptive Tax is due and payable at the time of payment for the single business permit or trade license.

Presumptive tax payers are liable to pay Turnover Tax. However presumptive tax paid is offset against the turnover tax payable.

Taxpayers who are eligible for Presumptive Tax may elect not to be under the provisions of this tax by writing to the Commissioner of Domestic Taxes. However, they will then fall under the income tax regime upon approval.

This tax is however not applicable to; Management and Professional Services, Rental business, VAT payers, Incorporated Companies and businesses with income above sh5 million per annum.

To pay it, login to itax then under the payments tab, select new payment registration, fill in the details as they are in the license or single business permit and generate the payment slip. Follow the steps in the payment slip to make the payment.

The Penalty for late payment of the Presumptive Tax is 5 per cent of the tax due.

Late payment interest is 1 per cent of the tax due per month.


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