14th-Mar-2026 • Sheldon Cooper • KRA
As a small business owner in Kenya, navigating the Kenyan Revenue Authority (KRA) landscape can seem daunting. However, with the right information, you can streamline your tax compliance process and ensure smooth operations for your business.
Firstly, it's essential to understand that KRA is responsible for collecting taxes and customs duties in Kenya. The organization aims to enhance revenue collection, promote voluntary tax compliance, and improve the efficiency of public financial management.
For SMEs, the primary taxes include Value Added Tax (VAT), Pay As You Earn (PAYE), National Health Insurance Fund (NHIF) contributions, and National Social Security Fund (NSSF) contributions. Each tax has its specific requirements and penalties for non-compliance.
If your annual turnover exceeds KES 5,000,000, you are required to register for VAT. VAT registration allows you to claim back the tax on your business expenses and increases your credibility with suppliers.
If you have employees, you are required to withhold PAYE from their salaries and submit it to KRA monthly. The PAYE rate varies depending on the employee's taxable income.
All employees and employers contribute 5% of the employee's monthly salary to NHIF, up to a maximum limit. As an employer, you are responsible for submitting these contributions to KRA.
Both employers and employees contribute 15% of the employee's monthly salary, up to a maximum limit, to NSSF. As an employer, you are responsible for submitting these contributions.
To simplify your tax compliance process, consider using a business management platform like Lipabiz. Our platform automates tax calculations and submissions, making it easier for SMEs to stay compliant and focus on growing their businesses.
