21st-Oct-2025 • Sheldon Cooper • KRA Compliance
Small and Medium Enterprises (SMEs) in Kenya are vital to the country's economic growth. However, navigating through the intricate web of KRA (Kenya Revenue Authority) compliance can be daunting for many entrepreneurs. This guide aims to simplify the process for SME owners across Kenya and Africa.
Firstly, it is essential to understand that KRA compliance is a necessity, not an option. Failure to comply could result in hefty fines or even business closure. To avoid such pitfalls, let's delve into the crucial aspects of KRA compliance for SMEs.
Value Added Tax (VAT) registration is mandatory when your annual taxable turnover exceeds KES 5 million. Non-compliance can lead to fines of up to 10% of the tax due or imprisonment for six months. By registering on time, you ensure a smoother tax-filing process and maintain a positive business reputation.
Timely filing of tax returns is crucial. The KRA online platform provides an easy-to-use system for filing monthly, quarterly, or annual returns, depending on your VAT status. For those without internet access, SMS Tax services are available to file returns and make payments.
If you have employees, you are required to withhold Pay As You Earn (PAYE) taxes from their salaries. It is vital to submit PAYE returns and remittances promptly to avoid penalties.
If your business deals with suppliers, contractors, or professionals, you are responsible for withholding taxes on their payments. Ensure that these amounts are remitted to KRA on time to maintain a good compliance standing.
The e-filing system simplifies tax filing by automating the process, reducing errors, and expediting responses. SMEs can enjoy faster refunds and improved communication with KRA through this digital platform.