Use this turnover tax calculator to find out exactly what turnover tax you owe KRA:
How to use:
- Enter your annual gross turnover (total sales before expenses)
- Enter your monthly gross turnover (optional – for monthly calculations)
- Select payment frequency (monthly or annual)
- View results: tax amount owed, effective rate, payment deadline, filing requirements, and compliance checklist
Are You Calculating Turnover Tax Correctly? #
Your business made KES 10 million last year. Your friend says “You owe KRA 150,000.” But is that right? Without this calculator, you’re guessing – and wrong calculations mean penalties, interest charges, or overpaying KRA.
Most small business owners think “I’ll just pay 3% of sales.” But the rate changed to 1.5% in July 2023. That miscalculation doubles your payment unnecessarily.
This calculator shows exactly what you owe based on Kenya’s Income Tax Act: the correct 1.5% rate, monthly vs annual calculations, filing deadlines, and whether you even qualify.
What Is Turnover Tax in Kenya? #
Turnover tax is a simplified tax for small businesses earning between KES 1 million and KES 25 million annually. Charged at 1.5% of gross sales, mandated by Section 12(C) of the Income Tax Act.
What turnover tax means:
- Tax on gross turnover, not profit
- 1.5% rate effective from July 1, 2023 (Finance Act 2023)
- Final tax – no additional income tax
- Monthly filing and payment required
- Alternative to standard 30% corporate tax
Read the official KRA Turnover Tax guidelines for complete details.
Who Qualifies for Turnover Tax? #
The calculator determines eligibility based on your annual sales:
Businesses That Qualify for Turnover Tax #
Annual turnover between KES 1M – 25M:
- Sole proprietors eligible
- Partnerships eligible
- Limited companies (resident in Kenya)
- Any business type meeting turnover criteria
Example – KES 15 million annual turnover:
- Gross sales: 15,000,000 KES
- Tax rate: 1.5%
- Annual tax: 15,000,000 × 1.5% = 225,000 KES
- Monthly payment: 225,000 ÷ 12 = 18,750 KES
Businesses That Don’t Qualify #
Below KES 1 million annually:
- No tax owed
- Still must file tax returns
- Subject to standard income tax on profits
Above KES 25 million annually:
- Not eligible
- Must pay standard corporate tax (30%)
- Can claim business expenses
- More complex filing requirements
Non-resident businesses:
- Only for Kenya residents
- Non-residents pay different tax rates
Can opt out:
- Write to KRA Commissioner
- Then subject to standard income tax rules
- Useful if you have large deductible expenses
Turnover Tax Rate and How to Calculate #
The calculator uses Kenya’s current tax law:
Current Rate: 1.5% #
Effective from July 1, 2023 (Finance Act 2023)
Changed from previous 3% rate. Always verify current rate on KRA website.
Formula: Tax = Gross Turnover × 1.5%
Monthly calculation example:
Month with KES 800,000 sales:
- Gross sales: 800,000 KES
- Tax owed: 800,000 × 1.5% = 12,000 KES
- Due: 20th of following month
Annual calculation example:
Year with KES 18 million sales:
- Gross sales: 18,000,000 KES
- Annual tax: 18,000,000 × 1.5% = 270,000 KES
- Paid monthly: 270,000 ÷ 12 = 22,500 KES average
What “Gross Turnover” Means #
Include in calculation:
- All sales revenue
- Service fees
- Any business income
- Before any deductions
Do not deduct:
- Cost of goods sold
- Operating expenses
- Salaries
- Rent or utilities
- Any business costs
Tax is on gross sales, not profit. No expense deductions allowed.
Use our profit margin calculator to understand your actual profitability after paying tax.
Real Turnover Tax Calculation Examples #
Example 1: Small Retail Shop #
Annual turnover: KES 8 million
- Monthly average sales: 8,000,000 ÷ 12 = 666,667 KES
- Monthly tax: 666,667 × 1.5% = 10,000 KES
- Annual tax: 120,000 KES
Payment schedule: 10,000 KES by 20th of each month.
Filing: Monthly return through iTax even if no sales.
Example 2: Service Business #
Annual turnover: KES 3.5 million
- Monthly average: 3,500,000 ÷ 12 = 291,667 KES
- Monthly tax: 291,667 × 1.5% = 4,375 KES
- Annual tax: 52,500 KES
Benefit: Simple calculation compared to 30% corporate tax on profit.
Compliance: Keep daily sales records for filing.
Example 3: Growing Startup #
Annual turnover: KES 22 million
- Monthly average: 22,000,000 ÷ 12 = 1,833,333 KES
- Monthly tax: 1,833,333 × 1.5% = 27,500 KES
- Annual tax: 330,000 KES
Warning: Approaching KES 25M threshold. Plan transition to corporate tax next year.
Example 4: New Business – Below Threshold #
Annual turnover: KES 800,000
- Monthly average: 800,000 ÷ 12 = 66,667 KES
- Tax owed: 0 KES (below 1M threshold)
- Filing required: Yes, must submit nil returns
Implication: Not eligible. Still file tax returns. May pay income tax on profits under standard rules.
Example 5: Established Business – Above Threshold #
Annual turnover: KES 32 million
- Tax system: Not eligible (above 25M threshold)
- Tax owed: 30% corporate tax on net profit
- Can deduct: All business expenses
Example profit scenario:
- Revenue: 32,000,000 KES
- Expenses: 24,000,000 KES
- Net profit: 8,000,000 KES
- Corporate tax: 8,000,000 × 30% = 2,400,000 KES
Compare this to hypothetical calculation: 32,000,000 × 1.5% = 480,000 KES. Corporate tax may be higher, but you can claim expenses.
Common Turnover Tax Calculation Mistakes #
Mistake 1: Using Wrong Rate Calculating with old rates instead of current 1.5%. Rate changed July 2023 per Finance Act 2023. Always verify the current rate.
Mistake 2: Deducting Expenses Subtracting costs before calculating. Tax is on gross sales, not net profit. No deductions allowed.
Mistake 3: Not Filing Monthly Thinking you can pay annually. KRA requires monthly filing by 20th of following month, even for zero sales months.
Mistake 4: Forgetting VAT Threshold Hitting KES 5 million turnover without registering for VAT. This tax doesn’t exempt you from VAT obligations. Use our VAT calculator if applicable.
Mistake 5: Assuming Automatic Registration Not registering when starting. You must register through iTax portal before first payment.
Mistake 6: Including VAT in Calculation If registered for both VAT and this tax, calculate on sales excluding VAT. Double-check your gross turnover definition.
Turnover Tax Payment and Filing Requirements #
Monthly Obligations:
Deadline: 20th day of month following tax period
- January sales → Payment by February 20
- February sales → Payment by March 20
How to file:
- Log into iTax portal
- Select “Returns”
- Choose “Turnover Tax Return”
- Enter gross sales for the month
- System calculates tax automatically
- Submit return
How to pay:
- Generate payment slip in iTax
- Pay at KRA partner banks
- Pay via M-PESA (KRA M-Service)
- Pay via bank transfer
Record keeping:
- Daily gross sales records required
- Keep for 5 years minimum
- Simplified compared to full accounting
Penalties for late payment:
- 5% of tax due if late filing
- 1% per month interest on unpaid amount
- Can accumulate quickly
Turnover Tax vs Corporate Tax: Which Is Better? #
When Turnover Tax Makes Sense #
Low profit margins:
- Retail with 10% margin
- This tax: 1.5% of sales
- Corporate tax: 30% of profit (3% of sales)
- Saves money
Simple operations:
- Fewer records to keep
- Easier compliance
- Lower accounting costs
Example:
- Sales: 10,000,000 KES
- Profit margin: 15% = 1,500,000 KES profit
- This tax: 150,000 KES (1.5% of sales)
- Corporate tax: 450,000 KES (30% of profit)
- Savings: 300,000 KES
When Corporate Tax Beats Turnover Tax #
High profit margins:
- Professional services with 40% margin
- Software business with 60% margin
- Corporate tax may be lower
Large deductible expenses:
- Heavy equipment depreciation
- Significant loan interest
- Big operational costs
Example:
- Sales: 10,000,000 KES
- Expenses: 8,000,000 KES
- Net profit: 2,000,000 KES
- This tax: 150,000 KES (1.5% of sales)
- Corporate tax: 600,000 KES (30% of profit)
- First option better by 450,000 KES
Can opt out: Write to KRA if corporate tax would save you money. Calculate both scenarios first with our calculator.
Understanding Your Turnover Tax Calculator Results #
Calculator Shows:
- Eligibility based on annual turnover
- Monthly tax amount
- Annual tax projection
- Effective rate (always 1.5% if eligible)
- Payment deadlines
- Filing requirements
- Compliance checklist
Eligibility Determination:
KES 1M – 25M: Eligible at 1.5% rate. Monthly filing required.
Below KES 1M: Not eligible. Must file income tax returns. May owe income tax on profits.
Above KES 25M: Not eligible. Subject to 30% corporate tax. Can deduct expenses.
Compliance Checklist Includes:
- KRA PIN registration
- iTax portal access
- Monthly return filing (even if nil)
- Payment by 20th of following month
- Daily sales records
- VAT registration if turnover exceeds KES 5M
- Annual reconciliation
Using Your Turnover Tax Calculator #
Turnover tax isn’t optional – it’s required by Kenya’s Income Tax Act Section 12(C).
The calculator:
- Determines eligibility by annual turnover
- Calculates exact tax at 1.5% rate
- Shows monthly payment amounts
- Provides filing deadlines
- Checks VAT registration requirement
- Estimates annual liability
- Includes compliance reminders
Remember:
- Tax on gross sales, not profit
- 1.5% rate effective from July 2023
- Monthly filing required by 20th
- No expense deductions allowed
- Must register for VAT if turnover exceeds KES 5M
- Can opt out by writing to KRA
- Keep daily sales records for 5 years
Wrong calculations mean KRA penalties plus 1% monthly interest. This calculator prevents errors and shows exact obligations.
Related Tools & Resources #
VAT Calculator Kenya #
Calculate VAT obligations when turnover exceeds KES 5 million. Use when growing beyond turnover tax limits.
Profit Margin Calculator #
Calculate actual profitability after tax. See if turnover tax or corporate tax is better for your margins.
Official Resources: #
Sources: Kenya Income Tax Act Section 12(C), Finance Act 2023, KRA Turnover Tax guidelines. Calculator uses official 1.5% rate effective July 1, 2023. Thresholds are KES 1 million minimum and KES 25 million maximum annual turnover.
Last Updated: December 2025