The Kenya Revenue Authority (KRA) continues to strengthen its compliance enforcement mechanisms, leveraging technology and data analytics to identify non-compliant taxpayers. For businesses operating in Kenya, staying on top of your tax obligations is not optional — it is a legal and strategic imperative.
Key Tax Obligations for Businesses in 2025
Corporate Income Tax
All companies registered in Kenya are required to file annual income tax returns. The corporate tax rate remains at 30% for resident companies and 37.5% for non-resident companies. Installment tax payments are due on the 20th of April, June, September, and December.
Value Added Tax (VAT)
Businesses with an annual turnover exceeding KES 5 million must register for VAT. Monthly VAT returns are due on the 20th of the following month. Failure to file attracts penalties of KES 10,000 per month or 5% of the tax due, whichever is higher.
Pay As You Earn (PAYE)
Employers must deduct PAYE from employee salaries and remit by the 9th of the following month. The new tax bands introduced in the Finance Act must be applied correctly to avoid penalties.
Withholding Tax
Withholding tax applies to specific payments including dividends, royalties, management fees, professional fees, and rental income. Rates vary by payment type and whether the recipient is resident or non-resident.
Common Compliance Pitfalls to Avoid
- Late filing — KRA's iTax system automatically computes penalties for late submissions
- Incorrect classifications — Misclassifying employees as contractors to avoid PAYE
- Transfer pricing non-compliance — Particularly relevant for subsidiaries of multinational groups
- Failure to maintain proper records — KRA requires records to be kept for 7 years
How Matengo & Associates Can Help
Our taxation team provides comprehensive support including tax health checks, compliance reviews, and representation before KRA in case of disputes. We work with businesses across all sectors — from SACCOs and NGOs to private companies — to ensure full compliance while optimising your tax position.
Contact us today for a free initial tax compliance review.