Who pays TOT
Resident businesses (individuals or companies) with annual turnover above KES 1M but not exceeding KES 25M qualify. Below 1M, you're exempt and use the income tax PIN return only. Above 25M, you graduate to corporation tax (30% on profits) and must register for VAT if turnover exceeds 5M.
What's included in turnover
Gross sales revenue. No expense deductions. That's the trade-off for the simplified rate, TOT is faster but blunt. If your margin is thin, switching to corporation tax (where you can deduct expenses) may be cheaper net.
Who's exempt from TOT
- Rental income earners (use Monthly Rental Income tax 7.5% instead)
- Management or professional services (use corporate income tax)
- Limited liability companies above the threshold (use corporation tax 30%)
- Anyone whose turnover exceeds KES 25M annually