Hello guys. KRA is on my neck claiming that I should file TOT for my business from as far back as last year November. How can I avoid this since I want to be in a Tax class where I can make Deductions such as Depreciation, Expenses etc
You can elect to be filing VAT. That will mean you’ll be filing annual returns where you’ll claim wear & tear & expenses to the extent allowed in Income Tax Act.
If you go for TOT, you’ll only be paying. You’ll never be in a credit(claimable) position.
Can I claim wear and tear under VAT and make Deductions on that?
Kenyans need mass education on taxes, liabilities and obligations.
Last week I came across an article about how youth are crying foul after being encouraged to form companies in Uhuru’s 1st term which they did but never got any tenders or contracts.
Now their shock is finding they owe KRA fines and penalties for not filing their company returns since they had registered them for PIN and VAT.
If someone had given them all the relevant information they wouldn’t be in such a fix.
When you register for VAT, you’ll have to file annual returns. While doing so, you claim wear & tear deductions. Not at the point of filing vat.
As for TOT, you pay 3% of your gross sales quarterly and is it. You wont need to file any annual returns.
True, personally i need more knowledge on matters taxes. Do you have any pointers i can start with? Thanks in advance
Me too ASAP…TOT ile mi najua…ama wacha too
Am also not that knowledgeable In taxation matters, only the basics.
Am also not that knowledgeable In taxation matters, only the basics.
Am in a similar position. Not sure what are my tax obligations exactly and what are the penalties. What needs filing when and how. Why cant kra have a clear tax guideline for dummies/noobs
I need too
They have its just we Kenyans don’t like reading! >> http://www.kra.go.ke/index.php/domestic-taxes/income-tax/type-of-taxes
Here are the basics
1.If you have a business PIN no you are supposed to file VAT returns on or before 20th of each month, the filing is for the previous month like this month VAT returns are for July.
2. If your business is registered for PAYE its payable on or before 9th of every month, you can check your tax obligations on your iTax page.
3. Every year on or before 30th June you are to file Income Tax for the directors of business & the company.
3. Never issue an Invoice/Receipt without an ETR receipt! KRA pounce on one of these its about 500,000 fine per invoice!
4. Be in the business of collecting your customers KRA PIN no for VAT filing, doing so (file VAT3 returns) without customers PIN will get you a KRA audit call!
5. Keep proper records of your Invoices/Receipts KRA have a habit of demanding these! from time to time.
If you ever get a call from KRA don’t panic ujipeleke huko! Relax! you can always claim to be out of town, moving offices, scheduled to travel etc this gives ample time to talk to an accountant with Tax knowledge before you go fry yourself!
Hope this helps!
chief hapa umetupaka mafuta. VAT returns are due MONTHLY.
customers or suppliers?
Much enlightened.
While at it, what are the pros and cons of registering,
1.A business name or,
2.A company name?
I need to clear some issues over these two.
following
What I meant is, when you are VAT registered, you’ll have an additional obligation to file annual returns.
But when you are TOT registered, you only file the TOT and thats it.
Leta mbiashara ninukishe kitunguu.
Business name just means you can use your personal pin to transact biz.
Company name entails using company pin.
What matters are the obligations your pin has regardless of the status of business or company names.
The more the obligations the more compliant you are required to be. E.g a business may have Vat, paye & Income tax obligation.
A company may have all the above or may fail to have paye.
Am no CPA or CPS, but will give my two cents, just an overview
Business name is same as sole proprietorship, all the business obligations are also ‘Yours’ legally. Meaning the business is not a separate legal entity your KRA PIN is the business PIN there is no separation from business earnings and your earnings.
Advantages? Easier/cheaper/faster to open or register. A good place to start this can grow to a limited company in future. Easier to wind up or close down
Cons: The business is no separate legal entity. Can not trade with certain companies. There are Government and private business who do not trade with business names/sole proprietors! Even some banks put a limit/cap on loans and facilities granted to such.
Company Name by this I think you mean Limited company, best way to go, the business is a separate legal entity with its own legal documents, KRA PIN as well.
Advantages: Separate legal entity, more room for growth can sell shares, have joint ventures, etc from experience Banks, Customers, take limited companies more ‘seriously’ than business names or sole proprietors.
Cons: Difficult more processes before winding up, more tax obligations, Needs* two or more directors (though I hear rules have changed). Expensive to register (15-100,000K) depending on law firm. Pays more business taxes, licenses compared to business name.