13th-Dec-2025 • Martin Mwangi • KRA
For small and medium-sized enterprises (SMEs) in Kenya, navigating the Kenyan Revenue Authority (KRA) tax landscape can be an overwhelming task. However, with proper understanding and efficient management, it's possible to streamline your tax obligations and minimize potential headaches.
Firstly, it's essential to understand the various taxes applicable to SMEs in Kenya. These include Value Added Tax (VAT), Pay As You Earn (PAYE), National Health Insurance Fund (NHIF) contributions, and Withholding Taxes (WHT).
For instance, if your business is VAT-registered, you're required to file periodic VAT returns. By leveraging a digital platform like Lipabiz Technologies Ltd, which offers built-in KRA compliance features, you can automate this process and reduce the likelihood of errors.
In regards to PAYE, it's mandatory for businesses with employees. Accurately calculating and timely submitting PAYE returns is crucial to avoid penalties. Lipabiz provides a payroll management system that simplifies this process.
Moreover, NHIF contributions are compulsory for both employers and employees. Failure to comply may lead to penalties or even business closure. Lipabiz's platform integrates with KRA systems to ensure seamless submission of NHIF returns.
Withholding taxes apply when you pay out money to third parties, such as contractors or suppliers. These taxes should be deducted at source and remitted to KRA. Lipabiz can help manage these payments and the corresponding WHT submissions.
According to a 2019 study by the Kenya National Bureau of Statistics (KNBS), SMEs contribute approximately 48% to the country's GDP. However, compliance with KRA regulations remains a challenge for many SMEs due to complexities and lack of digital tools.