The Account Number is the Payment Registration number quoted at the top right corner of the generated payment slip. When you successfully remit the deducted amount to KRA, you will receive the Withholding Certificate in the email you registered with on iTax. It is important to note that withholding tax is not a final tax. You are required to declare the income and the withholding tax certificates upon filing individual tax returns and pay any tax due,.
What does iTax mean? The percentage deducted varies between incomes and is dependent on whether you are a resident or non-resident. Below is a comprehensive list of rates to help you calculate withholding tax. The table is handy for all employers and other income administrators required to exercise tax compliance. There are certain incomes that are exempted from the remittance of withholding tax.
These include:. How to file rental income tax in Kenya. The Kenya Revenue Authority expects all the withholders to remit all deductions and withholdings accrued from suppliers before the ending of the 20th day in the upcoming month.
Late payments of withholding tax attract overwhelming penalties , which stretch to thousands of shillings. Currently, KRA charges a penalty of 20, or 5 percent of the payable fee, whichever is higher of the two. The withholder must pay all withholding tax on behalf of the supplier in cases of forgetfulness when declaring withholding tax or failure to comply with the Withholding Tax Act.
When a taxpayer trader supplies and invoices an appointed withholding VAT Agent, the payment for supply is made less VAT charged or that which ought to have been charged. KRA penalty for not filing returns.
It is important to note that the withholding tax on invoice should be remitted to KRA within 14 days of deducting the VAT. Qualifying interests and qualifying dividends are examples of final Withholding Tax. Withholding Tax is not charged on employment income therefore if you have a withholding certificate you need to declare that you have another source of income on the IT1 excel return form.
The process of filing Withholding Tax Return is the same as filing the employment returns using the P9 Form. So, I am just going to brush through the steps for declaring the Withheld Tax on the Excel sheet. Withholding Tax in Kenya is tax that is deductible from certain classes of income at the point of making a payment to a non-employee. It can be pre-payment or a final tax.
Withholding Tax transactions in Kenya includes the following;. This is a payment made in respect of business or user training service designed to improve efficiency and includes payment for incidental costs associated with provision of such services. This is a payment to any person acting in an advisory capacity or providing services on a consultancy basis.
Withholding Tax is not deductible where the withholdee is exempt under any law in Kenya e. This is a form of Income Tax that is levied on corporate bodies such as Limited companies, Trusts, and Co-operatives, on their annual income. Companies that are based outside Kenya but operate in Kenya or have a branch in Kenya pay Corporation Tax on income accrued within Kenya only.
Do partnerships pay corporation tax? Companies and Partnerships with employees are required to deduct tax according to the prevailing tax rates from their employees' salaries or wages on each payday for a month and remit the same to KRA on or before the 9th of the following month. This is a tax that is deductible from certain classes of income at the point of making a payment, to non-employees.
Companies and partnerships making the payment, are responsible for deducting and remitting the tax to the Commissioner of Domestic Taxes. This is a tax paid in advance before a public service vehicle or a commercial vehicle goes for the annual inspection.
Installment tax is paid by persons who have tax payable for any year that amounts to Kshs. This is a tax charged on rental income received from renting out property. Taxation of rental income depends on how the rented property was used for residential or commercial purposes. All persons individuals, partnerships and companies that rent out property to other persons for either residential or commercial use are required to pay income tax on rent received.
To facilitate compliance, KRA appoints agents to withhold and pay, a percentage of the gross rent as tax.
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