Monthly sales of KSh 300,000 attract Turnover Tax of KSh 4,500 at 1.5%.
How Turnover Tax works
Turnover Tax is a simplified, final tax for small businesses. Instead of working out profit, eligible businesses pay a flat 1.5% of gross sales every month by the 20th. It applies to resident businesses with annual turnover above KSh 1 million and not more than KSh 25 million.
The rate was cut from 3% to 1.5% by the Tax Laws (Amendment) Act 2024. Because TOT is charged on sales rather than profit, it can cost more than normal income tax for businesses with thin margins. You can elect out of TOT and file normal income tax instead.
Rates used in this calculator
Turnover Tax
Rate
1.5% of gross sales
Applies to turnover
KSh 1,000,000 – KSh 25,000,000 a year
Due
20th of the following month
Frequently asked questions
Who has to pay Turnover Tax in Kenya?
Resident individuals and businesses with annual gross turnover above KSh 1,000,000 and not more than KSh 25,000,000 fall under Turnover Tax, unless they elect to use the normal income tax regime.
Can I deduct business expenses under Turnover Tax?
No. TOT is charged on gross sales, not profit, so there's no deduction for cost of goods sold, rent, salaries or other expenses. This is what makes it simple, but it can cost more than standard income tax for low-margin businesses.
Do I still need to file annual returns if I pay TOT?
Businesses exempted from standard income tax by paying TOT are still required to declare and file their corporate or individual tax returns annually.
What is the Turnover Tax rate in Kenya?
Turnover Tax is 1.5% of gross monthly sales, down from 3%, since the Tax Laws (Amendment) Act 2024.