📌 Introduction: What Is Presumptive Tax?
If you run a small roadside business, a kiosk, or a mitumba stall, you’ve likely heard about Presumptive Tax. But how does it work in 2025? Do you file a return? How much do you pay?
This guide is written for small businesses with a turnover below Ksh 1 million, and explains how Presumptive Tax applies, how to pay it, and how it connects with your Single Business Permit.
Let’s break it down — the Ushuru.com way.
🧾 What Is Presumptive Tax?
Presumptive Tax is a simple, estimated tax based on your Single Business Permit (SBP) fee — not your actual income. It was introduced to help informal and micro businesses comply with tax laws without complicated bookkeeping.
📌 It’s governed by Section 12C of the Income Tax Act.
👥 Who Should Pay Presumptive Tax in 2025?
You qualify if:
- Your business turnover is less than Ksh 1 million per year
- You operate without formal books of accounts
- You are not registered for VAT, TOT, or Corporation Tax
Common examples:
- Kiosks
- Bodaboda riders
- Street vendors
- Shoe shiners
- Hawkers
- Beauty stalls
❗ If you earn more than Ksh 1M/year, KRA expects you to register for Turnover Tax (TOT) instead.
💸 Presumptive Tax Rate in 2025
| Tax Type | Rate | Based On |
|---|---|---|
| Presumptive Tax | 1% | On the amount of Single Business Permit (SBP) paid to county |
Example:
If your SBP costs Ksh 5,000, your Presumptive Tax =
1% × 5,000 = Ksh 50
✅ You pay this amount once per year when renewing your business permit.
💼 Difference Between Presumptive Tax and TOT
| Feature | Presumptive Tax | Turnover Tax (TOT) |
|---|---|---|
| Based on | Permit fee | Monthly sales |
| Income threshold | Below Ksh 1M/year | Between Ksh 1M and 25M/year |
| Filing required? | Yes (simplified) | Yes (monthly) |
| Tax amount | Fixed | 1% of gross sales |
| Bookkeeping needed? | No | Yes (basic records) |
🧑💻 How to Pay Presumptive Tax in 2025
🪜 Step-by-Step:
- Visit your County government portal to renew your SBP
- During payment, the system will auto-calculate 1% of the SBP fee
- You will receive:
- SBP certificate
- Presumptive Tax e-slip or receipt
- KRA receives this information directly through system integration
📝 Some counties (e.g. Nairobi, Mombasa, Kiambu) have integrated directly with KRA.
📥 Do I Need to File a Tax Return?
Yes! Even though it’s a simplified regime, KRA still requires annual return filing under the “Income Tax – Presumptive Tax” category.
Filing Deadline:
📆 30th June of the following year
⚖️ What If I Don’t Pay or File?
| Non-Compliance | Penalty |
|---|---|
| Not filing return | Ksh 2,000 |
| Paying late | 5% penalty + 1% interest monthly |
| Non-registration | KRA may assign you to another tax type (e.g. TOT) |
KRA uses county data and field surveys to match businesses to the right tax regime.
❌ Common Mistakes to Avoid
- ❌ Ignoring Presumptive Tax thinking it’s optional
- ❌ Renewing business permit but skipping tax payment
- ❌ Assuming it replaces TOT
- ❌ Not filing return after paying permit fee
- ❌ Registering for the wrong tax obligation on iTax
🧠 FAQs
Q1: Is Presumptive Tax optional?
No. It is mandatory if your business qualifies and you renew a county permit.
Q2: Can I pay both Presumptive Tax and TOT?
No. You’re required to choose one, based on turnover.
Q3: What if my business grows during the year?
You must update your tax obligations on iTax and shift to TOT or Income Tax.
Q4: Do I need to file Nil returns?
If you have no business activity in a year, yes, file Nil return to stay compliant.
Q5: What if I operate without a business permit?
You’ll still be liable for income tax and may be penalized during audits.
Alt text: “2025 Kenyan guide to presumptive tax filing for small businesses – Ushuru.com”
📣 Conclusion: Even Small Hustles Have Big Responsibilities
Presumptive Tax was made to help Kenya’s smallest entrepreneurs stay tax-compliant without needing an accountant. It’s easy, affordable, and now fully digital.
✅ If you’ve paid for your SBP, don’t stop there — file your return, keep your PIN compliant, and stay eligible for KRA services.
👉 Need help confirming your eligibility or filing your return?
Visit Ushuru.com for personalized support.