Turnover Tax applies to businesses with annual turnover between KES 1,000,000 and KES 25,000,000, charged at a flat rate of 1.5% of gross sales.
Turnover Tax (TOT) charges a flat percentage of a small business's gross sales, with no deductions for expenses and no distinction between a profitable month and a thin one. This Turnover Tax Calculator takes your gross sales for a period and shows the TOT due, along with whether your business actually falls inside the TOT band.
How Is Turnover Tax Calculated in Kenya?
Turnover Tax charges 1.5% of gross sales, exclusive of VAT, with no deductions allowed for business expenses, stock, or losses — the tax applies to money in, not profit. KRA requires TOT to be filed and paid monthly, on or before the 20th of the month following the sales being declared.
Who Qualifies for Turnover Tax?
TOT applies to a resident individual or business whose annual gross turnover falls between KES 1,000,000 and KES 25,000,000. Businesses earning below KES 1,000,000 a year are exempt from TOT, and businesses earning above KES 25,000,000 a year fall outside TOT entirely and must file under the standard income tax regime instead. The Finance Act 2023 cut this upper threshold from KES 50,000,000 to KES 25,000,000, effective 1 July 2023.
What Income Is Excluded From Turnover Tax?
Several income types never count toward TOT even when the recipient's overall turnover falls inside the band: rental income, management, professional, or training fees, and income already subject to final withholding tax such as qualifying dividends or interest. Employment income and non-resident taxpayers are excluded from TOT entirely.
Monthly or Annual — Which Figure Should I Enter?
Select Monthly and enter a single month's gross sales if you're preparing your regular TOT return — the calculator applies 1.5% directly to that figure. Select Annual to check a full year's turnover instead; the calculator applies the same 1.5% rate to the annual figure and shows the equivalent monthly liability. Either way, the eligibility check looks at the annualized figure, since KRA's KES 1,000,000–25,000,000 band is defined per year of income.
Why Doesn't Turnover Tax Care About Profit?
Because TOT is a final tax on gross sales, not net income, a business with high revenue but thin margins pays the same 1.5% as one with the same revenue and fat margins — there's no deduction for cost of goods sold, rent, salaries, or any other expense. This keeps TOT simple to file, but it can cost a low-margin business more than the standard income tax regime would, which is worth comparing before opting into TOT voluntarily.
How Do I Use the Turnover Tax Calculator?
Choose whether you're entering a monthly or annual gross sales figure, then type in the amount, excluding VAT. The calculator multiplies it by 1.5% to show your TOT due and flags whether your annualized turnover actually falls inside the KES 1,000,000–25,000,000 TOT band.
Verify with KRA: This calculator applies the 1.5%-of-gross-sales rate and KES 1,000,000–25,000,000 turnover band set out under the Finance Act 2023. Some older guidance still circulates the earlier 3%/1% rates and the KES 50,000,000 threshold, so confirm your exact filing figure against KRA's official Turnover Tax guidance before filing.
What is the current Turnover Tax rate in Kenya?
Turnover Tax is charged at 1.5% of gross sales, exclusive of VAT, with no deductions allowed for business expenses. This rate took effect on 1 July 2023 under the Finance Act 2023.
What is the turnover threshold for Turnover Tax in Kenya?
TOT applies to businesses with annual gross turnover between KES 1,000,000 and KES 25,000,000. Businesses below KES 1,000,000 are exempt, and businesses above KES 25,000,000 must file under the standard income tax regime instead.
Is rental income subject to Turnover Tax?
No. Rental income, management and professional fees, and income already subject to final withholding tax are all excluded from Turnover Tax, even if the recipient's other business turnover falls inside the TOT band.