Types of Individual Taxes on Personal Income in Kenya
Taxation is a fundamental aspect of any thriving economy, and Kenya is no exception. It is essential to understand the various types of taxes individuals in Kenya are subject to, particularly regarding personal income. Whether you are a resident or a non-resident, the Kenyan tax system has specific guidelines to ensure the government can provide vital services to its citizens.
1. Personal Income Tax
Personal Income Tax is a common form of tax levied on individuals based on their income. In Kenya, residents are taxed on their worldwide earned income, including any employment or services rendered within or outside Kenya. Non-resident individuals, on the other hand, are only taxed on income earned from within Kenya or derived from Kenya.
The Kenyan tax system employs a progressive tax structure, where tax rates increase as income levels rise. The current personal income tax rates, effective from July 1, 2023, are as follows:
- On the first KES 288,000: 10%
- On the next KES 100,000: 25%
- On the next KES 5,612,000: 30%
- On the next KES 3,600,000: 32.5%
- On all income over KES 9,600,000: 35%
Residents are also entitled to a monthly personal relief of KES 2,400.
2. Residential Rental Income Tax
For individuals who earn income from the use or occupation of residential property in Kenya, the government imposes Residential Rental Income Tax. Effective from January 1, 2016, a simplified tax rate of 10% was introduced for landlords with an annual gross rental income of KES 15 million or less. This flat tax rate does not allow for tax-deductible expenses.
Starting January 1, 2024, the rental income tax rate will be further reduced to 7.5%. Individuals meeting the criteria must file monthly tax returns via the i-Tax system and pay the tax by the 20th day of the following month. Landlords who prefer the old tax regime can elect to be taxed under normal tax rates with the approval of the Commissioner.
How FaidiHR Can Help
Understanding and managing these tax obligations can be a complex and time-consuming task. Here at FaidiHR, we offer efficient and accurate statutory filing services to assist individuals and companies in ensuring compliance with tax regulations. Our team of experts is dedicated to simplifying the tax process and providing comprehensive support.
If you have questions or need assistance with your statutory filings, please don't hesitate to reach out to us. We are here to help you navigate the tax landscape and ensure you meet your obligations while optimizing your financial position.
Take the first step towards efficient and accurate filing. Contact us by booking a free demo here: https://faidihr.com/demo/requestdemo today for tailored solutions that meet your unique needs.
Remember, tax compliance is not only a legal requirement but also a key contributor to the overall development of our nation. Let's work together to build a better, more prosperous future.