Taxes for Bar and Restaurant

#1
So what are the tax requirements for a bar and restaurant? This is a new venture and am wary of KRA sweeping everything I have when they pounce on me not paying any taxes. What equipment should I have? How does the entire ETR thing work? What are the tax obligations? Any input on this will be appreciated.
 
#7
Ku import hizi famous inahitaji nini?
Its hard to import famous Liqours.. companies like wow beverages, first drinks have a sole right to import a certain brand and market it within the region. Wine is much tricky juu ata sales za wines are low compared to spirits. N ukidai ku import a product that has roots within kenya utapitishia TZ and thats not direct from the manufacturer.utapitishia maybe dubai TZ then kenya na upatwe na gava...hehehe utalilia choo.
No wonder we have funny jamisoni..
 

Energizer

Village Elder
#8
For a bar & restaurant you should think abt catering levy, which 2% of your gross sales payable by 10th of every month. Minimum sales p.m to charge the levy should be 250kshs.

The moment you have an etr, it means you will be charging vat every time you make a sale and pass the sale through the etr. Vat is payable by the 20th of the following month.

If you annual sales are between .5m and 5m, you should register for T.O.T. Which is filed and paid quarterly, by 20th of the month following end of the quarter.

Good luck @dennis_darren
 
#9
First of all if you wish to run the pub as a sole proprietor, your pin will be used for the business, you will have to add the b/s details to your pin details. As you were told, u can opt for TOT kaa turnover is 500k-5M, but know that you cannot have both TOT and Income tax resident individual. If your taxable sales are 5M per annum, VAT ndani. VAT is a monthly thing and with proper compliance, its not a big deal; its all about input (purchases) and output (sales). My advice to you is to run the pub as a Private limited company. Its way easier, cause hata tax planning can be done...kaa mko wawili or more, partnership. KRA will run compliance checks if uko Vat and you do funny stuff like mismatching invoices, not using etr and underdeclaration...
 
#10
For a bar & restaurant you should think abt catering levy, which 2% of your gross sales payable by 10th of every month. Minimum sales p.m to charge the levy should be 250kshs.

The moment you have an etr, it means you will be charging vat every time you make a sale and pass the sale through the etr. Vat is payable by the 20th of the following month.

If you annual sales are between .5m and 5m, you should register for T.O.T. Which is filed and paid quarterly, by 20th of the month following end of the quarter.

Good luck @dennis_darren
So what do I have to pay? vat or catering levy or both?
 
#11
First of all if you wish to run the pub as a sole proprietor, your pin will be used for the business, you will have to add the b/s details to your pin details. As you were told, u can opt for TOT kaa turnover is 500k-5M, but know that you cannot have both TOT and Income tax resident individual. If your taxable sales are 5M per annum, VAT ndani. VAT is a monthly thing and with proper compliance, its not a big deal; its all about input (purchases) and output (sales). My advice to you is to run the pub as a Private limited company. Its way easier, cause hata tax planning can be done...kaa mko wawili or more, partnership. KRA will run compliance checks if uko Vat and you do funny stuff like mismatching invoices, not using etr and underdeclaration...
How to pay the vat sasa?
 

Energizer

Village Elder
#13
How to pay the vat sasa?
Whenever you make a sale, you will have to key in the sales in your etr.

End of the month you produce a monthly etr summary which should match your sales in the accounting software you use.

You subtract vat on all purchases from your sales. If it is a negative(credit balance), you'll carry it forward to the following month.

If it is a +ve, you should pay by 20th.
 
#14
***Figures may differ from current rates.

upload_2017-9-4_2-8-55.png

upload_2017-9-4_2-11-24.png

Despite the hullaballoo about licenses it’s a fact that there are many wines and spirits bars operating without alcoholic drinks licenses. For instance in Nairobi’s Umoja and Kayole estates there are countless bars without the alcoholic licenses. It’s the same case in Kiambu, parts of Nakuru and Embu.

Such bars survive by bribing police and other officials. In Nairobi for instance almost all wines and spirits retail shops pay the police a daily amount which ranges between Kshs.50 and Kshs.200 whether they have a license or not. Thus some entrepreneurs don’t see the need of getting the license.

Despite this it’s important to have a license. Its gives you peace of mind in case the police or administrative regime changes,( National Campaign Against Drug Abuse) NACADA or Kenya Revenue Authority (KRA) come calling , like they often do after an alcohol related tragedy of sorts.

Still if your budget is limited and your location, say Nairobi, allows you can start without an alcohol license and apply for it later.

The operatization of the county governments after the March 2013 elections meant there were now new centers of power and policy. Although licensing of Wines and Spirits business is still governed by the Alcoholic Drinks Act 2010, county governments have the power to boost or limit the business by the local laws they pass.

In an effort to stand out as epitomes of morality a number of counties have come up with laws to strictly control the alcohol business. Such laws often have to do with location and limiting the number of Bars, and Wines and Spirits that can be licensed.

For instance in Kericho the first draft of the alcoholic bill proposed to totally ban the sale of alcohol. In the end the assembly passed a law that banned the sale of second generation alcoholic drinks. These are the cheap high alcohol content spirits introduced in the market in the last 5 or so years. ( 2009)”

The Nyandarua alcoholic law states that in case credit is extended to a bar patron it’s valid for 24 hours after which the debtor can get away with it Muranga County passed a bill in May 2014 that would see the shutting down of all Wines and Spirits in the region.

In addition to the usual raft of measures the Nairobi alcoholic law has a clause that says an authorized person can enter and inspect a bar or wines and spirits to see if it meets requirements as stipulated in the law. The definition of authorized person is vague leaving it open to abuse.

There is something almost similar in Embu where the alcoholic drinks law says that police officers above the rank of inspector are allowed to search any alcoholic premises to ascertain conformity with the bill.

The Meru bill says alcoholic drinks sold in the county will have to go a series of tests and certification before being sold. Whether they have the capacity to conduct such tests is another question.

In reality the laws have not been very strictly implemented. One is because most counties lack the capacity to implement them and secondly because of corruption which makes enforcers turn the other way.

For instance in Nairobi despite legislation which says that bars should not be within residential areas there are many Wines and Spirits operating on the ground floors of some flats. George Aladwa , a former mayor and active politician, is the chairman of the Nairobi alcoholic board.

The laws have created more avenues for corruption and increased the number of officials who can possibly ‘eat’ from your business.
 

LizK2030

Village Elder
#16
***Figures may differ from current rates.

View attachment 123843

View attachment 123844

Despite the hullaballoo about licenses it’s a fact that there are many wines and spirits bars operating without alcoholic drinks licenses. For instance in Nairobi’s Umoja and Kayole estates there are countless bars without the alcoholic licenses. It’s the same case in Kiambu, parts of Nakuru and Embu.

Such bars survive by bribing police and other officials. In Nairobi for instance almost all wines and spirits retail shops pay the police a daily amount which ranges between Kshs.50 and Kshs.200 whether they have a license or not. Thus some entrepreneurs don’t see the need of getting the license.

Despite this it’s important to have a license. Its gives you peace of mind in case the police or administrative regime changes,( National Campaign Against Drug Abuse) NACADA or Kenya Revenue Authority (KRA) come calling , like they often do after an alcohol related tragedy of sorts.

Still if your budget is limited and your location, say Nairobi, allows you can start without an alcohol license and apply for it later.

The operatization of the county governments after the March 2013 elections meant there were now new centers of power and policy. Although licensing of Wines and Spirits business is still governed by the Alcoholic Drinks Act 2010, county governments have the power to boost or limit the business by the local laws they pass.

In an effort to stand out as epitomes of morality a number of counties have come up with laws to strictly control the alcohol business. Such laws often have to do with location and limiting the number of Bars, and Wines and Spirits that can be licensed.

For instance in Kericho the first draft of the alcoholic bill proposed to totally ban the sale of alcohol. In the end the assembly passed a law that banned the sale of second generation alcoholic drinks. These are the cheap high alcohol content spirits introduced in the market in the last 5 or so years. ( 2009)”

The Nyandarua alcoholic law states that in case credit is extended to a bar patron it’s valid for 24 hours after which the debtor can get away with it Muranga County passed a bill in May 2014 that would see the shutting down of all Wines and Spirits in the region.

In addition to the usual raft of measures the Nairobi alcoholic law has a clause that says an authorized person can enter and inspect a bar or wines and spirits to see if it meets requirements as stipulated in the law. The definition of authorized person is vague leaving it open to abuse.

There is something almost similar in Embu where the alcoholic drinks law says that police officers above the rank of inspector are allowed to search any alcoholic premises to ascertain conformity with the bill.

The Meru bill says alcoholic drinks sold in the county will have to go a series of tests and certification before being sold. Whether they have the capacity to conduct such tests is another question.

In reality the laws have not been very strictly implemented. One is because most counties lack the capacity to implement them and secondly because of corruption which makes enforcers turn the other way.

For instance in Nairobi despite legislation which says that bars should not be within residential areas there are many Wines and Spirits operating on the ground floors of some flats. George Aladwa , a former mayor and active politician, is the chairman of the Nairobi alcoholic board.

The laws have created more avenues for corruption and increased the number of officials who can possibly ‘eat’ from your business.
Thanks. Great info hapa.
 
#17
If your sales per annum is between 500,000 and 5m, you will register for Turnover tax only.

If your sales are over 5M, you will have to pay for both catering levy and Vat.
Now that I understand the difference between turnover tax and VAT, I think my business falls under the turnover bracket. So the turnover tax is declared at the end of the year right?
 

Energizer

Village Elder
#18
Now that I understand the difference between turnover tax and VAT, I think my business falls under the turnover bracket. So the turnover tax is declared at the end of the year right?
Not at the end of the year, but after every quarter, e.g your sales for jan, feb, march, you declare the TOT by 20th of April.
 

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