Submission of a return without payment of the tax due also attracts a default penalty of Kshs.2000/=.

Unpaid tax attracts interest at the rate of 2% per month. DE-REGISTRATION A person whose income from business falls below Kshs.500,000/= in a year of income shall apply to the Commissioner for deregistration. Where the income from the business of a person exceeds Kshs.5 million during a year of income, that person shall notify the Commissioner of the change of status. Note: The approval granted by the Commissioner shall be effected in the subsequent year of income. OBJECTIONS AND APPEALS The taxpayer has a right to object to any assessment issued by the Commissioner. Objections and appeals shall be dealt with in accordance with the provisions of the Income Tax Act-Cap 470 Laws of Kenya.

KENYA REVENUE AUTHORITY Disclaimer: This information is form guidance only, and is subject to changes when the law is amended. Any omission does not absolve the taxpayer from making true and correct returns and statements of Accounts. For further information Please visit the nearest KRA office or Contact: Taxpayer Education Programme on Tel:020 2812010/2816095/2813079/2812013 or KRA Contact Centre Tel: 4999999

ISO 9001:2008 CERTIFIED

DOMESTIC TAXES DEPARTMENT

TURNOVER TAX
2011 / 2012

DOMESTIC TAXES DEPARTMENT HEAD OFFICE Times Tower Building 19th Floor Haile Sellasie Avenue P Box 30742 - 00100 .O. Tel.310900 Website:WWW.kra.go.ke KRA Online services portal: http//www.kra.go.ke/portal

DMG/DGW/Revised on 1st August, 2011

WHAT IS TURNOVER TAX (TOT)? Turnover Tax was introduced by the Finance Act 2006. Turnover tax means tax payable under Section 12C of the Income Tax Act Cap 470. The tax shall be applicable to any resident person whose turnover from business exceeds Kshs.500,000/= but does not exceed Kshs. 5 million during any year of income. Note: Business includes any trade, profession or vocation, and every manufacture, adventure and concern in the nature of trade, but does not include employment. The effective date of implementation of Turnover tax was 1st January 2008 TOT is charged at the rate 3% on gross sales For income tax purposes, TOT is a final Tax. No expenditure or capital allowance shall be granted against turnover tax. Turn over tax does not apply to:(i) Any person whose annual income is exempt from tax under the First Schedule of the Income Tax Act. Any person whose income is subject to withholding tax as a final tax such as interest and dividends received by individuals. Any person whose annual income from business does not exceed Kshs.500,000/= Limited companies Rental income Professional or management fees or training fees

REGISTRATION All taxpayers whose gross sales from business is below Kshs5 million but exceeds Kshs.500,000/= per year are registrable. Application for registration shall be done through the KRA online services portal, www.kra.go.ke/portal. For TOT purposes, "person" includes partnerships. Note: A person may elect not to be subject to TOT. However, taxpayers who prefer to remain in the normal tax regime shall apply in writing to the Commissioner. RECORDS The TOT registered taxpayers shall maintain the following records: Cash books Sales receipts and invoices. Daily sales summary (TOT 4) Purchases invoices Bank statements

BENEFITS OF TURNOVER TAX Simplifies the tax procedure Simplifies tax computation Simplifies record keeping Makes returns filing easier Reduces cost of compliance

RETURNS AND PAYMENTS The TOT taxpayer shall submit a quarterly return. The return shall be on a prescribed form TOT 3 TOT 3 also doubles as a pay in slip. Payment shall be made on or before the 20th day of the month immediately following end of the quarter. Note: A person may remit tax due on monthly basis and offset the tax paid in the tax return. Payment shall be made through banks appointed by the Commissioner of Domestic Taxes which include National Bank of Kenya, Kenya Commercial Bank and Co-operative Bank of Kenya. Payment will be made by cash, cheques or electronic funds transfers. TOT taxpayers are advised to register as KRA online services users to enable them access the KRA online services portal.www.kra.go.ke/ portal PENALTY AND INTEREST Failure to submit a TOT return by the due date (i.e 20th day of the month following the quarter) is liable to a default penalty of Kshs.2000.

(ii)

RATE OF TAX TOT is charged at the rate of 3% on gross sales of the business per annum No personal relief granted. TAX PERIOD For TOT purposes, tax period means every 3 calendar months commencing 1st January of every year.

(iii)

(iv) (v) (vi)

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