Minimum Tax
Minimum Tax
March 26, 2021
Minimum Tax
This will be a base income tax that will be payable by all persons regardless of whether they are making profit or not.
What will be the tax rate for minimum tax?
The tax will be charged at a rate of 1% on the gross turnover of the company.
What will be the due date for filing and paying minimum tax?
The tax shall be paid in installments and shall be due on the 20th day of each period ending on the 4th, 6th, 9th and 12th month of the year of income.
| Payment | Applicable Turnover | Date Payable |
| 1st Payment | 1st,2nd and 3rd months | By 20th of the 4th month |
| 2nd Payment | 4th & 5th months | By 20th of the 6th month |
| 3rd Payment | 6th,7th & 8th months | By 20th of the 9th month |
| 4th Payment | 9th,10th & 11th months | By 20th of the 12th month |
| Balance of Tax | 12th month | By the last day of the 4th month after the accounting period |
Incomes exempted from Minimum tax.
The following incomes shall be exempt from minimum tax.
- Income exempted by the act under the 1st Schedule of the income tax act
- Employment income
- Income that is subject to Residential Rental Income Tax
- Income that is subject to Turn over tax
- Income that is subject to Capital Gains Tax
- Income of entities operating in the extractives sector
Computation of minimum tax:
Illustration 1
| Tax Head | Tax Payable |
| Installment Tax | Kshs.1,200,000 |
| Tax Head | Gross turnover for Quarter 1 | Tax Payable |
| Minimum Tax | 150,000,000 | =1%*150,000,000=Kshs 1,500,000 |
In Illustration 1 the minimum tax is higher than the installment tax, hence the tax payer should pay minimum tax
Illustration 2
| Tax Head | Tax Payable |
| Installment Tax | Kshs.1,700,000 |
In Illustration 2 the installment tax is higher than the minimum tax, hence the tax payer should pay installment tax
How Can we help?
We can help you to calculate and file you minimum tax ensuring that you remain compliant with KRA
Send us an email: mary.njeri@jmassociates.co.ke or info@jmassociates.co.ke