Learn what Presumptive Tax in Kenya is, who it applies to, how it’s calculated, and how it interacts with Turnover Tax (TOT) in 2025.
🧾 What is Presumptive Tax?
Presumptive Tax is a simplified tax introduced by the Kenya Revenue Authority (KRA) targeting small businesses that may not maintain detailed books of accounts.
It’s calculated as a percentage of your single business permit fee, typically paid to the County Government.
Rate:
Originally 15% of the Single Business Permit amount (may vary by County or national policy updates)
⚖️ Who Was It Designed For?
Presumptive Tax was intended for:
- Small kiosks, shops, salons, and local retailers
- Informal businesses not earning more than Ksh 5 million per year
- Businesses operating without complex bookkeeping systems
📌 Note: If you’re formally registered for Turnover Tax (TOT), you’re not liable for Presumptive Tax.
🔁 What’s the Difference Between Presumptive Tax and Turnover Tax?
| Feature | Presumptive Tax | Turnover Tax (TOT) |
|---|---|---|
| Based On | Business Permit amount | Actual gross sales |
| Applies To | Informal or unregistered small businesses | Formal small businesses earning Ksh 1M–25M |
| Filing Frequency | Annually (with permit) | Monthly (by 20th) |
| Registration | Auto with permit | Register via iTax |
🛑 Is Presumptive Tax Still Active in 2025?
As of 2025, Presumptive Tax has largely been phased out in favor of Turnover Tax (TOT).
However:
- Some County Governments may still charge it alongside the permit
- Some older tax guides still refer to it — confusing taxpayers
💡 Current KRA policy prioritizes TOT, and new businesses are expected to register for TOT if they qualify (Ksh 1M–25M annual income).
💸 Example: Presumptive vs TOT
Wanjiku runs a salon in Kiambu.
- Her business permit costs Ksh 10,000
- Under Presumptive Tax → 15% × 10,000 = Ksh 1,500 once a year
- But she earns ~Ksh 1.8M/year → KRA expects her to pay Turnover Tax instead: 1% of Ksh 1.8M = Ksh 18,000 annually, filed monthly
🧠 When Might Presumptive Tax Still Be Relevant?
- When applying for or renewing a business license
- When dealing with County-level revenue systems
- If KRA has not onboarded your business to iTax yet (e.g., purely offline)
Still, for compliance and long-term benefits, it’s better to transition to TOT.
✅ Key Takeaways
- Presumptive Tax = based on your county business permit
- TOT = based on your actual income (1% of gross)
- TOT is now the dominant system for small business tax compliance
- Always register and declare via iTax if you earn Ksh 1M–25M annually
💬 FAQs
Q: Do I still need to pay Presumptive Tax if I’m on TOT?
No. If you’re registered for Turnover Tax, you’re exempt from Presumptive Tax.
Q: I run a small biz with no records — which tax applies?
If your sales are over Ksh 1M/year, register for TOT on iTax.
Q: Who collects Presumptive Tax — KRA or Counties?
KRA manages tax collection, but it’s often linked to County permit processes.
📣 Call to Action
Confused about whether to pay Presumptive Tax or register for TOT?
💬 Let Ushuru.com help you figure it out — the right way.
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