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

Subcribe to Newsletter

Top