The tumultuous history of Turnover Tax(TOT)

The tumultuous history of Turnover Tax(TOT)

Turnover Tax was introduced in the  year  2007 by Kibaki regime. Businesses eligible for the same were businesses with turnover between KES 500k and KES 5m p.a. The tax rate was 3%  on gross sales , payable quarterly. It was purely payable by sole proprietors.

The Finance Act  2018 scrapped  Turnover Tax and introduced presumptive tax  at 15% of the business permit fee issued by county governments. It was applicable to  sole proprietors whose turnover is below 5m

Turnover tax  was reintroduced  through Finance Act 2019 .  It was applicable to businesses with turnover less than 5m. Presumptive tax was retained as a  minimum tax.  Presumptive tax paid was to  be set off against turnover tax. The tax was to be paid monthly

In the year 2020, at the height of COVID-19, Turnover Tax rate was reduced to 1%. Its scope was expanded to business within KES1m-50m   turnover. Its scope was also extended to incorporated businesses

The Finance Act 2023 increased TOT rate to  3% , however it reduced the ceiling threshold to KES 25m gross sales.

The Affordable Housing Act of March 2024 has again reduced TOT from 3% to 1.5% of sales.

The tumultuous history of Turnover Tax(TOT)

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