Understanding your tax obligations is an important part of keeping your business compliant. Different taxes apply depending on your business activities, income, employees and the goods or services you provide. In this guide, I'll take you through some of the main business taxes in Kenya and what you need to know about them in 2026.
Corporation Tax
If you run a company, you may be required to pay corporation tax on its taxable income. Resident companies are currently taxed at 30%, while non-resident companies are generally taxed at 37.5% on income taxable in Kenya. Corporation tax is filed online through iTax using the Income Tax Company Return (IT2C). The return is generally due by the end of the sixth month after the company's accounting period ends.
Pay As You Earn (PAYE)
If you have employees, you are responsible for deducting PAYE from their taxable employment income and remitting it to KRA. PAYE is filed and paid monthly, with the deadline falling on or before the 9th day of the following month. You can file your PAYE returns online through iTax.
Withholding Tax
Withholding tax is deducted from certain payments and remitted to KRA on behalf of the person receiving the income. It can apply to payments such as interest, dividends, royalties, management and professional fees, rent and other specified payments. If you are required to deduct withholding tax, you generally need to remit it to KRA within five working days after making the deduction.
Turnover Tax
Turnover Tax (TOT) is a simplified tax for qualifying resident businesses. It applies to businesses with gross turnover of more than KSh 1 million but not exceeding KSh 25 million in a year. The current TOT rate is 1.5% of gross sales. Expenses are not deducted when calculating this tax. However, TOT does not apply to certain types of income, including rental income and management or professional fees.
Value Added Tax (VAT)
VAT is charged on taxable goods and services supplied in Kenya as well as certain imports. The general VAT rate is currently 16%, while specific supplies may be zero-rated or exempt. If you supply or expect to supply taxable goods or services with taxable turnover of KSh 5 million or more in a year, you are required to register for VAT. Voluntary registration may also be available below this threshold, subject to the applicable conditions. VAT returns and payments are generally due by the 20th day of the following month.
Capital Gains Tax
Capital Gains Tax (CGT) applies to gains made from the transfer of property situated in Kenya, subject to the applicable provisions and exemptions. The current CGT rate is 15% of the taxable gain.
Excise Duty
Excise duty applies to specific goods and services manufactured in Kenya or imported into the country. The rate depends on the particular goods or services involved. If your business deals in excisable goods or services, you may need to register for excise duty and meet the relevant filing and payment requirements. Excise returns are generally filed by the 20th day of the following month.
Stamp Duty
Stamp duty is charged on certain legal and commercial instruments and transactions. Depending on the transaction, you may need to pay stamp duty when dealing with matters such as property transfers, leases, shares or other chargeable instruments. The amount payable depends on the type and value of the transaction.
Rental Income Tax
If your business earns income from renting out property in Kenya, that income may be subject to rental income tax. For qualifying residential rental income, the Monthly Rental Income Tax regime applies to resident persons with gross rental income above KSh 288,000 and up to KSh 15 million per year. The current rate is 7.5% of gross rent. Commercial rental income is subject to the applicable income tax rules.
Wrapping Up
Understanding the taxes that apply to your business can help you stay compliant and avoid unnecessary tax problems. The tax you need to pay depends on factors such as your income, turnover, employees and the goods or services you provide. If you're unsure which taxes apply to your business, getting professional advice can help you understand your obligations and keep your tax affairs in order.