Free invoice generator and tax tools for Kenya

Almost every tax a Kenyan small business pays goes to the Kenya Revenue Authority. A sole trader's business profit is added to any other income and taxed at the same progressive bands as salaries, from 10% to 35%, under the Income Tax Act (Cap. 470). Landlords letting residential property can instead pay monthly rental income tax on gross rent, cut from 10% to 7.5% by the Finance Act 2023. Resident traders with turnover above KSh 1 million and up to KSh 25 million can come under turnover tax (section 12C), a monthly tax on gross sales that cannot be reduced by expenses. VAT applies once you register.

Hiring staff brings in other collectors besides KRA. KRA takes PAYE and the Affordable Housing Levy, but NSSF pension contributions go to the National Social Security Fund, SHIF health contributions go to the Social Health Authority, and the National Industrial Training Authority (NITA) charges employers its own training levy. Each has its own portal and deadline, so a business with even one employee deals with four bodies every month.

The latest reform is the Finance Act 2026 (Act No. 19 of 2026), signed on 23 June 2026, with most changes in force from 1 July 2026. It replaced the penalty for failing to issue an electronic tax invoice or to file and pay electronically, lets KRA send pre-populated returns by the end of January for taxpayers to confirm or amend within two months, and lengthens the wait before a VAT refund on an unpaid debt can be claimed from two years to three.