Turnover Tax(TOT) is a tax charged
on gross sales of a business as per Sec. 12(c) of the Income Tax Act.
First introduced vide Finance Act
2006, replaced by Presumptive Income Tax vide Finance Act 2018 then
reintroduced vide Finance Act 2019.
The effective date of TOT is 01/01/2020
Who should pay TOT?
Turnover Tax (TOT) is payable by
resident persons whose gross turnover from business is more than Kshs.
1,000,000 and does not exceed or is not expected to
exceed Kshs 50,000,000 in any given year.
TOT does not apply to:
- Persons with business
income below Ksh. 1,000,000 and above Kshs. 50,000,000,
- Rental Income,
Professional and Training Fees,
- Any income that is
subject to a final withholding tax under the Income Tax Act
Eligible taxpayers are
advised to log onto iTax, add the TOT obligation, file the monthly returns and
Taxpayers who are
eligible for Turnover Tax may opt not to be under the provisions of this tax by
writing to the Commissioner of Domestic Taxes. However this is subject to
What is the rate for
Turnover Tax (TOT)?
- Turnover Tax is
charged at the rate of 1% on gross sales.
- Expenses are not
- This is a final tax.
Filing of TOT Returns
TOT will be filed and paid on a
monthly basis. The due date is on or before 20th of
the following month.
Turnover Tax Return
- Login to itax
- Under the returns
menu, select file return, then turnover tax and download the excel return.
- Complete the return
- After filing the
return, go to payment menu, select 'payment', select the amount payable,
and generate a payment slip.
- Make the payment at a
partner bank or through M-pesa
What is the penalty for
- TOT late filing
penalty is Kshs. 1,000 per month (wef 25/04/2020)
- Late payment penalty
is 5% of the tax due
- Interest on unpaid tax
is 1% of the principal tax due.
Emerging Issues under
- The tax rate reduction
from 3% to 1%
- The removal of
Presumptive Tax (wef 25.04.2020)
- The change in filing
regime from quarterly basis to a monthly basis.
- The change in
threshold from below Ksh. 1M to between Ksh. 1M and Ksh 50M. This will
imply that business with a turnover above Ksh. 5,000,000 will pay both TOT
Source KRA Website
2020-07-16 17:21:47Post By: Sam Kim