Sole Proprietorship: Income Tax Returns
A sole proprietorship is registered under Business Name Registration option. It is owned and operated by one person.
A sole proprietorship business is taxed at the rate of Individual Income Tax. The owner is required to declare all income & losses to the revenue authority using the Owner’s PIN Certificate Number.
The owner must file Income Tax Returns for each year anytime between 1st January and 30th June of the following year.
After filing the return, generate the payment slip and proceed to pay any tax due.
It is advisable for a sole proprietor to engage an accountant to ensure that all accounts are maintained in accordance with the proper accounting principles and that the tax due is correctly determined.
Partnership: Income Tax Returns
A Limited Liability Partnership provided for by the Limited Liability Partnership Act is a corporate legal entity that is able to own property in its own name separate from its members. It is registered in the Limited Liability Partnership option.
An LLP is required to apply for a PIN with KRA iTax. PIN for all partners is required during this application.
LLPs do not pay corporation tax. Instead, they are required to declare profits through the Income Tax Partnership Return (IT2P) which also captures the profit-sharing ratio and partners’ PINs.
Any profits/ losses are transferred to individual PINs and used to file individual annual returns.
Annual returns must be filed for each year anytime between 1st January and 30th June of the following year.
The profits/losses become part of individual income and is taxed as a business income at a graduated scale of 10%-25%.
Corporate: Income Tax Returns
Resident companies are taxed on their annual income accrued in Kenya and income derived from business activities outside Kenya, at the rate of 30%.
Non-resident companies are taxed on their annual income accrued in Kenya at the rate of 37.5%.
After a company has been registered (see Company Registration), they must apply for a PIN Number in KRA iTax.
Companies are required to file Corporate Income Tax Returns before the end of the 6th month since the end of an accounting period. Therefore, for companies with an accounting period January- December, they are required to file their Corporate Income Tax before the 30th June of the following year.
