Kenya Tax Compliance: What You Need to Know

If you live or run a business in Kenya, staying on the right side of the Kenya Revenue Authority (KRA) is a daily reality. Miss a deadline or get a form wrong, and you could face penalties that eat into your profit. This guide breaks down the most important changes, the basics of filing, and practical steps you can take to stay compliant without pulling your hair out.

First, understand that Kenya’s tax landscape is shifting fast. The Finance Act 2024 introduced new rates for personal income tax, revised Value Added Tax (VAT) thresholds, and tightened reporting for digital services. These moves aim to widen the tax base and improve collection efficiency. For most individuals, the biggest impact will be on PAYE (Pay As You Earn) calculations and the requirement to submit monthly tax returns through the iTax portal.

Key Changes in 2024

1. Updated Income Tax Bands. The personal income tax bands have been adjusted upward, meaning lower earners now pay slightly less while higher earners see a modest increase. Make sure your payroll software reflects the new brackets – otherwise KRA will flag your submissions.

2. VAT Threshold Increase. Small businesses with annual turnover below KES 1 million are now exempt from registering for VAT. If your turnover hovers around that mark, you may choose to stay unregistered and avoid the administrative load.

3. Digital Services Tax (DST). Companies that provide online platforms, streaming, or cloud services must now register for DST if their global turnover exceeds KES 5 billion. This includes many SaaS providers operating in Kenya.

4. Automated Withholding Tax (AWT). KRA has rolled out an automated system for withholding tax on certain payments, especially to contractors and freelancers. Payments made through the iTax platform will automatically deduct the correct amount.

How to Stay Compliant

Now that you know what’s new, here’s how to keep your tax affairs in order:

Register early. If you’re starting a new business, register for a PIN and, if needed, for VAT within 30 days of your first transaction. Delays can trigger a KRA audit.

Use the iTax portal. All filing, payment, and record‑keeping can be done online. Set up automatic reminders for filing dates—April 30 for personal tax, monthly deadlines for PAYE and VAT.

Keep clean records. Store invoices, receipts, and bank statements electronically for at least five years. KRA can request them at any time during an audit.

Hire a qualified tax advisor. A professional can help you navigate complex issues like transfer pricing or cross‑border transactions. It’s often cheaper than paying a penalty later.

Stay informed. Follow KRA’s official communications, and check the Finance Ministry’s releases for any mid‑year adjustments. Subscribing to a reputable tax news outlet keeps you ahead of unwanted surprises.

Compliance isn’t just about avoiding fines—it’s about building credibility with customers, investors, and partners. When you file on time and pay the right amount, you demonstrate that your business is trustworthy and ready for growth.

Need more specific advice? Browse our latest articles on Kenya tax compliance, from step‑by‑step filing guides to deep dives on the newest DST regulations. Each piece is written in plain English, so you can act fast without getting lost in legal jargon.Remember, taxes are a moving target. Regularly review your processes, adapt to new rules, and you’ll keep your operations running smoothly while staying on KRA’s good side.