Facts About Turnover Tax

Turnover Tax(TOT) is probably the most misunderstood tax in Kenya. .The misinformation stems from the history of TOT discussed earlier. The following are some of the correct facts about TOT:

-TOT is applicable to businesses whose annual turnover is between KES 1,000,000 and KES 25,000,000

-TOT rate is 3% of sales.((revised to 1.5% in March 2024))

-TOT doesn't allow expenses deduction.

-TOT is an Income Tax

-TOT is a final tax

-TOT is payable monthly

-Rental Income, Professional Fees incomes and incomes subject to final withholding tax are exempt from TOT.

-TOT is optional: You can elect(choose) not to be subject to TOT, by notice in writing addressed to the Commissioner, in this case you will be subject to corporate tax(tax on profits)

-TOT and corporate tax are mutually exclusive: You cannot be registered for both, you choose either.

-TOT and VAT are not mutually exclusive: a taxpayer who is subject to TOT can still register for VAT. Once you hit VAT threshold of KES 5,000,000 vatable sales, you are obligated to register for VAT, your TOT registration not withstanding.