CBK governor Patrick Njoroge visited Nairobi streets on Saturday, to find out how micro and small business owners were fairing.
In an effort to expand the tax base and increase revenue collection, Kenya Revenue Authority (KRA) announced in December the introduction of a presumptive tax to micro and small business owners of Ksh5 million or less per year.
The new presumptive tax took effect from January 1, where traders were to be taxed 15 percent of the cost of their business permit or trade license fee.
Previously, the tax was charged at three percent.
According to the Kenya Revenue Authority, the move was necessary considering that at least 60 percent of Kenyans engaged income-generating activities, but did not pay tax.
In a country of 45 million with more than 20 million taxpayers engaged in income generating activities, less than 10 million are registered taxpayers.
As of 2015, there were 8.1 million taxpayers in the Personal Identification Number database.
In 2018, only 3.2million filed their returns leading to a Ksh1.48 trillion tax collection or an average Ksh123.93 billion a month in the year ending June 2018 against a target of Ksh1.65 trillion.
Businesses that offer management and professional services, incorporated companies as well as rental businesses are exempted from paying presumptive tax.
Also exempted from this tax head are persons whose incomes are exempt from tax as stipulated in the First Schedule of the Income Tax Act. Such, however, should be backed by valid certificates of exemption.
Taxpayers are required to make payment for presumptive tax at the point of obtaining and making payment for business permits or trade licenses or renewal of the same by the county governments.
Payment for presumptive is made on the iTax platform by generating a payment registration number which is payable through mobile money transfer or at any KRA partner bank.
The due date for the presumptive tax is the date payment for a business permit or trade license is made.
