Understanding Kenya's Turnover Tax (TOT): A Guide for Small Traders

By Avatechtax Team — Avatechtax Consultancy

Kenya's Turnover Tax (TOT) is a simplified regime introduced to bring small, hard-to-reach businesses into the tax net without the burden of full income tax compliance. If your business earns between KSh 1 million and KSh 25 million per year, TOT may apply to you.

TOT Rate and Basis

TOT is charged at 1.5% of gross turnover — not profit. This makes it easy to calculate but means you pay even when margins are thin. The monthly obligation is due by the 20th of the following month via iTax.

Who Is Excluded?

Incorporated companies (Ltd) — they pay corporation tax
Businesses with turnover above KSh 25 million — they must register for VAT and pay normal income tax
Professionals such as doctors, lawyers, and accountants
Businesses that have opted into the VAT regime

Practical Compliance Steps

Register for TOT on your iTax account under "Registration." Keep monthly gross sales records, even if informal. File monthly returns and pay by the 20th. Failure attracts a 5% penalty on unpaid tax plus 1% interest per month.

TOT doesn't exempt you from other obligations like PAYE (if you have employees) or NSSF/SHA contributions. Many TOT-registered businesses inadvertently miss these obligations and accumulate penalties.

Avatechtax's Individual tax package covers TOT registration and monthly filings for KSh 5,500 per year. Learn more.

Understanding Kenya's Turnover Tax (TOT): A Guide for Small Traders

By Avatechtax Team — Avatechtax Consultancy

Our annual guide to financial planning for the new financial year — budgeting frameworks, tax calendar, and growth strategies.

In Kenya's competitive business landscape, staying informed on business matters is not optional — it is the foundation of long-term survival and growth. Businesses that invest in professional guidance consistently outperform those that navigate these challenges alone.

Key Points to Understand

Compliance First: Meeting your statutory obligations protects your business from penalties and reputational damage.
Professional Guidance: Working with a qualified accountant or tax advisor pays for itself many times over in savings and avoided errors.
Record Keeping: Accurate, up-to-date records are the foundation of every financial decision and regulatory obligation.
Planning Ahead: Proactive planning — rather than reactive scrambling — gives your business a measurable financial advantage.

At Avatechtax Consultancy, our team of ICPAK-certified professionals is ready to guide you through every aspect of business management. Whether you are a startup, an established SME, or a regulated entity, we provide tailored solutions that keep you compliant, organised, and financially empowered.

How Avatechtax Can Help

Our services span bookkeeping, tax compliance, payroll processing, auditing, and business advisory — delivered with a commitment to accuracy, timeliness, and transparent fixed fees. Contact us today for a free consultation and discover how we can add value to your business.