Turnover Tax Return (Kenya)
TURNOVER TAX RETURN WORKSHEET
Section 12C, Income Tax Act Cap. 470 | Tax Procedures Act No. 29 of 2015
For use with KRA iTax Portal — itax.kra.go.ke
Return Period: [Return Month] [Return Year]
Filing Due Date: [Filing Due Date]
SECTION A — TAXPAYER DETAILS
Taxpayer Name: [Taxpayer Name]
KRA PIN: [KRA PIN]
Business Name: [Business Name]
Business Address: [Business Address]
Taxpayer Type: [Taxpayer Type]
Nature of Business: [Business Nature]
SECTION B — GROSS RECEIPTS FOR THE MONTH
Nil Return (no receipts): [Nil Return]
B1. Cash sales receipts: [Cash Sales]
B2. Mobile money receipts (M-Pesa / Airtel Money): [Mobile Money Sales]
B3. Bank transfer / EFT receipts: [Bank Receipts]
B4. Other business receipts: [Other Receipts]
TOTAL GROSS RECEIPTS (B1 + B2 + B3 + B4): [Gross Receipts Total]
Note: Excluded from gross receipts for TOT purposes: rental income (taxed under Section 6A, Income Tax Act Cap. 470), employment income (taxed under PAYE), and management or professional fees.
SECTION C — TOT COMPUTATION
TOT Rate: 3% (Section 12C, Income Tax Act Cap. 470)
Turnover Tax Payable = 3% × [Gross Receipts Total] = [TOT Payable]
TOT is a final tax. Businesses correctly filing and paying TOT are not additionally subject to income tax on the same receipts.
SECTION D — PAYMENT DETAILS
TOT Amount Payable: [TOT Payable]
Payment Date: [Payment Date]
Payment Method: [Payment Method]
KRA iTax Acknowledgement Number: [iTax Acknowledgement Number]
Late filing penalty (if applicable): KES 2,000 per month for individuals / KES 5,000 per month for companies under Section 83, Tax Procedures Act No. 29 of 2015.
SECTION E — DECLARATION
I, [Taxpayer Name] (KRA PIN: [KRA PIN]), declare that the information provided in this return worksheet is true and correct to the best of my knowledge, and that all gross business receipts earned during [Return Month] [Return Year] have been disclosed.
I acknowledge that failure to file a complete and accurate TOT return or to pay the tax due by [Filing Due Date] will result in penalties under the Tax Procedures Act No. 29 of 2015.
I have retained supporting records (sales receipts, M-Pesa statements, bank statements) for at least 5 years as required by Section 80 of the Income Tax Act Cap. 470.
Declaration date: [Declaration Date]
Record-keeping reminder: Retain all sales records, mobile money statements, bank statements, invoices, and this filed return for a minimum of 5 years. The KRA may conduct a compliance audit under the Tax Procedures Act No. 29 of 2015 and request these records at any time.
Taxpayer / Authorised Representative
________________
Signature
What Is a Turnover Tax Return (Kenya)?
A Turnover Tax Return in Kenya sets out the financial particulars the authority requires to assess the tax owed.
The current Turnover Tax regime in Kenya applies to persons — both individuals carrying on business and companies — whose gross annual business turnover is above KES 500,000 but does not exceed KES 15,000,000. Persons with turnover below KES 500,000 per year are not required to register for TOT. Persons with turnover above KES 15,000,000 are required to register for income tax under the normal regime and, if applicable, for Value Added Tax (VAT) under the Value Added Tax Act No. 35 of 2013. The 3% TOT rate is applied to gross receipts — the total amount received from the business before any deductions — making it a final tax that replaces income tax for qualifying businesses. TOT is a final tax: a business that has paid TOT on its receipts does not additionally pay corporate or individual income tax on the same receipts.
The Kenya Revenue Authority administers Turnover Tax through the iTax portal (itax.kra.go.ke), the KRA's online tax administration platform. TOT returns are filed monthly by the 20th day of the following month. For example, the TOT return for January must be filed and the tax paid by 20 February. Filing and payment are done electronically through the iTax portal using the taxpayer's KRA PIN. The KRA issues an Acknowledgement Receipt upon successful filing and a Payment Slip for the corresponding tax payment.
Certain categories of business are excluded from the Turnover Tax regime under Section 12C of the Income Tax Act Cap. 470, including rental income (subject to the residential rental income tax under Section 6A of the Act), management or professional fees, income of a partnership exceeding the threshold, and employment income. Businesses that are registered for VAT under the Value Added Tax Act No. 35 of 2013 are excluded from TOT. The KRA has issued practice notes on the Turnover Tax regime, and further guidance is available from KRA Tax Advisors at Huduma Centres across Kenya's 47 counties.
Record-keeping is essential for Turnover Tax compliance. Although the TOT regime is designed to be simple, taxpayers are required under Section 80 of the Income Tax Act Cap. 470 to maintain adequate records of gross receipts for a minimum of 5 years. The KRA has authority under the Tax Procedures Act No. 29 of 2015 to conduct compliance audits of TOT taxpayers and to issue amended assessments where declared gross receipts are found to be understated. Penalties for late filing of a TOT return are imposed under Section 83 of the Tax Procedures Act No. 29 of 2015 at KES 2,000 per month for individuals and KES 5,000 per month for companies for each month the return remains unfiled.
The Turnover Tax Return filing template available on forms-legal.com assists Kenyan small business owners in organising their monthly gross receipts by income category, computing the 3% TOT payable, and preparing a supporting worksheet for KRA iTax entry. It is particularly useful for sole traders, market vendors, small retail businesses, artisans, and service providers across Kenya who are registered for TOT but do not employ a full-time accountant.
When Do You Need a Turnover Tax Return (Kenya)?
A Turnover Tax Return in Kenya is required in the following circumstances, and must be filed monthly by the 20th of the month following the period in which receipts were earned.
A Turnover Tax Return is needed when a sole proprietor or small company in Kenya has registered for Turnover Tax with the Kenya Revenue Authority (KRA) and has earned gross business receipts in the preceding month. Even where no receipts were earned (a nil return period), the KRA requires a nil TOT return to be filed by the 20th of the following month to avoid late-filing penalties under Section 83 of the Tax Procedures Act No. 29 of 2015.
A Turnover Tax Return is required when a small business that was previously below the KES 500,000 annual threshold has crossed that threshold and registered with the KRA for TOT. Registration is triggered when annual receipts exceed KES 500,000, and the KRA issues a TOT Registration Certificate confirming the effective date of registration.
A Turnover Tax Return is needed when a business previously filing under the full income tax regime has applied to the KRA to migrate to the TOT regime — for example, a sole trader whose turnover has dropped below the KES 15,000,000 upper threshold and who qualifies for the simplified regime.
A Turnover Tax Return is required each month by market traders, small retailers, hawkers, artisans, mechanics, salon owners, food kiosk operators, and other informal sector businesses across Kenya that have formalised their tax status and obtained a KRA PIN and TOT registration.
A Turnover Tax Return is needed when a small business in Kenya is preparing its annual accounts and needs to reconcile monthly TOT receipts with total annual turnover, particularly where the business is applying for a bank loan, a county business permit renewal, or a tender from a public institution that requires a Tax Compliance Certificate from the KRA.
A Turnover Tax Return is also required when a business owner wishes to demonstrate compliance with Kenya's tax laws to a prospective investor, financial partner, or landlord, and needs a filing history of properly submitted TOT returns to obtain a Tax Compliance Certificate from the KRA under the Tax Procedures Act No. 29 of 2015.
What to Include in Your Turnover Tax Return (Kenya)
A Kenya Turnover Tax Return prepared for KRA iTax filing under Section 12C of the Income Tax Act Cap. 470 must contain the following key elements.
Taxpayer Identification: The taxpayer's full legal name (individual or company name), KRA Personal Identification Number (PIN), postal and physical address, and business name as registered with the Business Registration Service (BRS) under the Business Registration Service Act No. 15 of 2015. The KRA PIN must match the iTax portal registration exactly to avoid rejection.
Return Period: The month and year for which the TOT return is being filed. The return period must be stated clearly (e.g., January 2025) to confirm the iTax portal applies the return to the correct tax period. TOT is a monthly tax under Section 12C of the Income Tax Act Cap. 470, and a separate return must be filed for each month.
Gross Business Receipts: The total amount received from the business during the return period, broken down by source if the business earns income from multiple activities. Gross receipts include cash sales, mobile money receipts (M-Pesa, Airtel Money), bank transfers, and any other consideration received. Receipts do not include VAT collected (for businesses separately registered for VAT), returns, and allowances.
TOT Computation: The Turnover Tax payable is calculated at 3% of gross receipts. The return must show: Gross Receipts (KES) × 3% = TOT Payable (KES). Where nil receipts were earned, the return must state KES 0 receipts and KES 0 tax, creating a nil return record in the KRA iTax system.
Excluded Receipts: Where the business earns income from categories excluded from TOT — such as rental income subject to the residential rental income tax under Section 6A of the Income Tax Act Cap. 470, or employment income subject to PAYE — those receipts must be identified separately and excluded from the TOT gross receipts computation.
Payment Reference: The iTax system generates a payment slip (E-slip) upon submission of the TOT return, which is used to pay the tax through KRA-partner banks, mobile money, or the KRA eCitizen payment platform. The payment reference number, the amount payable, and the due date (20th of the following month) must be recorded.
Record-Keeping Supporting Documents: The taxpayer should retain supporting documents for a minimum of 5 years under Section 80 of the Income Tax Act Cap. 470, including sales receipts, M-Pesa statements, till rolls, order forms, invoices, and bank statements. The KRA's Tax Procedures Act No. 29 of 2015 gives the KRA Commissioner authority to conduct compliance checks and request these records at any time.
Tax Compliance Certificate: After filing and payment, the taxpayer can apply through the KRA iTax portal for a Tax Compliance Certificate (TCC), which is valid for 12 months and is required for county business permits under the County Governments Act No. 17 of 2012, government tenders under the Public Procurement and Asset Disposal Act No. 33 of 2015, and various financial services applications. The forms-legal.com Turnover Tax Return template provides a structured monthly worksheet for Kenyan small businesses to organise gross receipts, compute TOT, and maintain records for KRA compliance and Tax Compliance Certificate applications.
Additional compliance elements for a Turnover Tax Return (Kenya) used in Kenya include: Under Kenyan law, the Constitution of Kenya 2010 is the supreme law. The Law of Contract Act (Cap. 23) governs contractual obligations. The Kenya Revenue Authority (KRA) administers tax under the Income Tax Act (Cap. 470). The High Court of Kenya, established under Article 165 of the Constitution, has unlimited original jurisdiction. The Data Protection Act No. 24 of 2019 and the Office of the Data Protection Commissioner (ODPC) govern personal data. Forms-legal.com provides this template as a starting point for Kenya-compliant documentation.
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note = {Free legal document template}
}Frequently Asked Questions
In Kenya, any person — individual, sole proprietor, or company — whose gross annual business receipts exceed KES 500,000 but do not exceed KES 15,000,000 is required to register for Turnover Tax (TOT) and file monthly TOT returns with the Kenya Revenue Authority (KRA) under Section 12C of the Income Tax Act Cap. 470. Persons with annual turnover below KES 500,000 are not required to file TOT returns, though they must still file an annual income tax return if they earn taxable income. Persons with annual turnover above KES 15,000,000 are excluded from the TOT regime and must file under the standard income tax regime. Certain income categories are excluded from TOT regardless of amount, including rental income, management or professional fees, employment income, and income of businesses registered for VAT. The KRA issues a TOT Registration Certificate upon successful registration, and the obligation to file monthly returns commences from the effective date on the registration certificate.
The Turnover Tax rate in Kenya is 3% of gross business receipts under Section 12C of the Income Tax Act Cap. 470, as amended by the Finance Act 2022. TOT is a final tax — it replaces income tax for qualifying businesses and is not deducted from or added to income tax. Monthly TOT returns must be filed and the tax paid through the KRA iTax portal (itax.kra.go.ke) by the 20th day of the month following the month in which the receipts were earned. For example, for receipts earned in March, the TOT return must be filed and the tax paid by 20 April. Payment is made via KRA-approved channels, including bank transfers to designated KRA collection accounts, Lipa na M-Pesa via the KRA Pay Bill number, or directly through the eCitizen platform. The KRA issues an Acknowledgement Receipt for each filed return. Late filing attracts a penalty of KES 2,000 per month for individuals and KES 5,000 per month for companies under Section 83 of the Tax Procedures Act No. 29 of 2015.
No. A business registered for Value Added Tax (VAT) under the Value Added Tax Act No. 35 of 2013 is excluded from the Turnover Tax regime under Section 12C of the Income Tax Act Cap. 470. VAT registration is compulsory when annual taxable turnover exceeds KES 5,000,000. Once a business crosses the VAT threshold and registers for VAT, it is removed from the TOT regime and must file VAT returns monthly via the KRA iTax portal and income tax returns annually under the standard income tax regime. TOT and VAT are separate taxes with separate returns filed through the KRA iTax system. A business that is below the VAT threshold and is registered for TOT files only the monthly TOT return. Businesses should monitor their annual turnover carefully and notify the KRA promptly when the VAT threshold is reached to avoid penalties under the Tax Procedures Act No. 29 of 2015 for late VAT registration.
Where a registered Turnover Tax taxpayer in Kenya earns no gross business receipts in a given month — for example, during a period of business inactivity, illness, or seasonal downturn — a nil TOT return must still be filed with the KRA by the 20th of the following month. A nil return records KES 0 gross receipts and KES 0 TOT payable through the KRA iTax portal. Filing a nil return is mandatory: failure to file any return — including a nil return — constitutes a failure to comply with the Tax Procedures Act No. 29 of 2015 and attracts late-filing penalties of KES 2,000 per month for individuals and KES 5,000 per month for companies under Section 83 of the Tax Procedures Act. Accumulated penalty debt can prevent the taxpayer from obtaining a Tax Compliance Certificate (TCC) from the KRA, which is required for county business permits under the County Governments Act No. 17 of 2012 and public procurement participation under the Public Procurement and Asset Disposal Act No. 33 of 2015.
A Kenyan business registered for Turnover Tax (TOT) must migrate to the standard income tax regime when its gross annual receipts exceed the KES 15,000,000 upper TOT threshold. The business owner must notify the KRA through the iTax portal of the change in tax status by applying to deregister from TOT and register under the standard income tax regime — corporation tax for limited companies under Section 7 of the Income Tax Act Cap. 470 (currently 25% for small companies with turnover below KES 100 million), or individual tax for sole proprietors under the graduated rates. If annual turnover also exceeds the KES 5,000,000 VAT threshold, the business must simultaneously apply for VAT registration under the Value Added Tax Act No. 35 of 2013 and begin collecting and remitting VAT. From the date of migration, the business must maintain full books of account under Section 80 of the Income Tax Act Cap. 470 to support the income-based tax computation, rather than simply recording gross receipts. Failure to migrate when the threshold is exceeded may result in an amended TOT assessment and penalties from the KRA under the Tax Procedures Act No. 29 of 2015.
A Turnover Tax taxpayer in Kenya is required under Section 80 of the Income Tax Act Cap. 470 and the Tax Procedures Act No. 29 of 2015 to maintain adequate records of all gross business receipts for a minimum of 5 years from the date of the relevant tax return. Required records include: daily sales records or till rolls; M-Pesa and Airtel Money statements showing business receipts; bank statements for business accounts; invoices and receipts issued to customers; purchase records and expense receipts (relevant for the taxpayer's own accounts, even though TOT is computed on gross receipts not net profit); and copies of all filed TOT returns and KRA payment receipts. The KRA Tax Procedures Act No. 29 of 2015 gives the Commissioner of Domestic Taxes authority to issue a notice requiring the taxpayer to produce records for inspection within a specified period, and to conduct an on-site compliance audit. Where records are inadequate or missing, the KRA may issue an estimated assessment of gross receipts and compute TOT on the estimated amount, with the burden on the taxpayer to demonstrate that the KRA's estimate is incorrect.
Yes. Turnover Tax (TOT) under Section 12C of the Income Tax Act Cap. 470 is a final tax in Kenya for qualifying businesses. This means that a business that has correctly registered for TOT and paid TOT at 3% on its gross receipts does not additionally pay income tax — whether corporation tax or individual income tax — on the same business receipts. TOT replaces the income tax liability for the qualifying business receipts. However, TOT is only a final tax for income derived from trading and business activities within the TOT regime. Income from other sources — for example, rental income taxed separately under Section 6A of the Income Tax Act Cap. 470, employment income taxed under the PAYE system, or interest and dividends subject to withholding tax — remains subject to separate tax treatment and must be reported in the appropriate return. A sole proprietor who earns both TOT-qualifying business income and rental income, for example, must file both a monthly TOT return and a separate residential rental income tax return with the KRA.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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