Kenya Flag254 Payroll Hub

Turnover Tax (TOT) Filing Guide

← Back to Filing Guidelines

💼 What is Turnover Tax (TOT)?

Turnover Tax is a simplified tax regime for small businesses in Kenya. It's a final tax charged on gross sales, meaning no other income tax is payable on the same income.

📊 Key Details:
  • Rate: 1.5% of gross turnover
  • Threshold: KES 1 million to KES 50 million annual turnover
  • Filing: Monthly by the 20th
  • Final Tax: No additional income tax required

📋 Who Qualifies for TOT?

Eligible Businesses

  • Resident persons (individuals, partnerships, companies)
  • Annual gross turnover between KES 1 million and KES 50 million
  • Not registered for VAT (or willing to deregister)

Excluded from TOT

  • Management, professional, or consultancy services
  • Training services
  • Rental income (use MRI instead)
  • Income subject to withholding tax as final tax
  • Incorporated companies (unless they opt in)
💡 Note: TOT is optional. Businesses can choose to remain under the normal income tax regime if it's more beneficial.

📊 TOT vs Normal Income Tax

✅ Turnover Tax (TOT)

  • 1.5% on gross sales
  • No expense deductions
  • Simple calculation
  • Monthly filing
  • Final tax - no annual return

📊 Normal Income Tax

  • 10%-35% on taxable profit
  • Expenses are deductible
  • Complex calculation
  • Annual filing
  • Requires proper books

Which is Better? Example:

Business: Annual Sales KES 5,000,000, Expenses KES 3,500,000

Item TOT Normal Tax
Gross Sales 5,000,000 5,000,000
Less: Expenses N/A 3,500,000
Taxable Amount 5,000,000 1,500,000
Tax Rate 1.5% ~25% effective
Tax Payable KES 75,000 KES 375,000

Result: TOT saves KES 300,000 in this case!

⚠️ When Normal Tax is Better: If your profit margin is very low (below 5%), normal income tax may result in lower tax than TOT.

📋 How to Register for TOT

1

Log in to iTax

Visit itax.kra.go.ke and log in.

2

Amend PIN Details

Go to "Registration" → "Amend PIN Details".

3

Add TOT Obligation

Under tax obligations, add "Turnover Tax".

4

Submit Application

Submit and wait for approval (usually instant).

📋 Monthly TOT Filing Guide

1

Calculate Monthly Turnover

Add up all gross sales for the month (before any deductions).

2

Calculate TOT

TOT = Gross Turnover × 1.5%

Example: Monthly sales of KES 400,000

TOT = 400,000 × 1.5% = KES 6,000

3

Log in to iTax

Access the iTax portal with your credentials.

4

File TOT Return

Go to "Returns" → "File Returns" → "Turnover Tax".

5

Enter Turnover

Enter your gross monthly turnover. The system calculates the tax.

6

Submit and Pay

Submit the return and pay via M-Pesa Paybill 572572 by the 20th.

📅 Deadline: TOT returns must be filed and paid by the 20th of the following month. January TOT is due by 20th February.

📊 TOT Quick Reference

Monthly Turnover TOT Payable (1.5%)
KES 100,000 KES 1,500
KES 250,000 KES 3,750
KES 500,000 KES 7,500
KES 1,000,000 KES 15,000
KES 2,000,000 KES 30,000
KES 4,166,667 (max monthly) KES 62,500

⚠️ Penalties

Late Filing

Higher of 5% of tax due or KES 2,000

Late Payment

5% of tax due + 1% interest per month

⚠️ Important: If your turnover exceeds KES 50 million, you must exit TOT and register for normal income tax and possibly VAT.

🔗 Related Resources