How to File PAYE Tax Returns as an Employer in Kenya

That moment when your accountant is on leave, the 9th of the month is looming, and you’re staring at your payroll list wondering, “How do I file PAYE tax returns for my team without messing up?” If you’re a business owner or HR manager in Nairobi, Mombasa, or anywhere in between, that panic is real.

KRA penalties are no joke. This guide cuts through the jargon and gives you the straight-up, practical steps to file your employer PAYE returns correctly and on time. We’ll cover the iTax process, common pitfalls, and how to keep your business compliant with KRA.

What is PAYE and Why You Must File as an Employer

PAYE stands for Pay As You Earn. It’s the tax you deduct from your employees’ salaries every month and remit to the Kenya Revenue Authority (KRA). Think of it as your most important monthly errand as an employer.

Filing the return is how you tell KRA, “Here’s what I paid my people, and here’s the tax I withheld.” It’s not optional. Getting it wrong or late means penalties, interest, and a potential audit from KRA officers. You don’t want that kind of attention.

Who Needs to File Employer PAYE Returns?

If you have even one employee on a regular salary or wage, you’re an employer in KRA’s eyes. This includes:

• Registered companies and NGOs.
• Individual employers (like someone with a house help or gardener).
• Startups with co-founders on payroll.

The rule is simple: if you’re making statutory deductions, you must file. No excuses.

Step-by-Step: How to File PAYE Returns on iTax

Filing is done online via the KRA iTax portal. Forget about physically going to Times Tower unless you have a major issue. Here’s your action plan.

Step 1: Gather Your Documents First

Before you even log in, get your records ready. You’ll need:

• Your KRA PIN (as the employer).
• The monthly payroll summary showing each employee’s gross pay, benefits, and deductions.
• Your employees’ KRA PINs and their correct monthly taxable incomes.
• A stable internet connection. Don’t start this on a shaky boda boda hotspot!

Step 2: Log in and Navigate to the Right Form

Go to itax.kra.go.ke and log in with your employer PIN credentials. Once in:

1. Click on Returns.
2. Select File Return.
3. Under “Tax Obligation,” choose PAYE.
4. Select the correct return period (e.g., May 2025).
5. Choose the Employer’s Monthly Deduction Return (P10) form.

Step 3: Filling the P10 Form Accurately

This is where focus is key. The P10 form has a table where you enter details for each employee. For every staff member, you must input:

• Their KRA PIN (double-check for tyres!).
• Gross Taxable Income (salary + benefits).
• Tax Charged (the calculated PAYE).
• Personal Relief (fixed at Ksh 2,400 per month).
• Other deductions like NSSF, NHIF, and pension.

The system will auto-calculate the final tax payable. Review every line. A small error in an employee’s PIN can cause them major headaches later.

Step 4: Submit, Pay, and Get Your Receipt

After filling the form, submit it. The system will generate a payment slip if you have tax due. Pay immediately via M-Pesa (Paybill 572572), bank, or other integrated methods.

Once payment is confirmed, download and save two things: the filled P10 form and the payment receipt. Print a copy for your records and give payslips to your employees. This is your proof of compliance.

The Kenyan-Specific Realities of PAYE Filing

You can’t just follow generic tax advice here. The Kenyan context changes everything. Let’s talk about the real-world factors that affect how you file PAYE tax returns as an employer in Kenya.

Deadlines, Penalties, and the “Nairobi Rush”

The deadline is the 9th day of the following month. Not the 10th, not the close of business on the 9th. By midnight on the 9th. Filing on the 10th attracts an automatic penalty of 5% of the tax due, plus 1% interest per month. That’s KRA’s rule, and they are strict.

Pro-tip: Never wait until the 8th or 9th to file. Why? iTax often gets sluggish or times out on deadline days due to high traffic—the “digital traffic jam.” Smart employers file by the 5th. Treat it like beating the Mombasa Road jam by leaving at 5:30 AM.

Navigating M-Pesa and Bank Glitches

You’ve filed, now you need to pay. The M-Pesa Paybill 572572 (KRA) is a lifesaver. But have a backup plan. Sometimes, especially near month-end, transactions fail or delay.

If your payment doesn’t reflect immediately, generate the payment slip again and try a different method, like your bank’s internet banking. Keep the transaction code. If the money is deducted but not reflected on iTax after 24 hours, go to your nearest KRA Huduma Centre (like the one at Huduma Centre in GPO, Nairobi) with proof of payment for assistance. Don’t just assume it will sort itself out.

Dealing with Employee Turnover and New Hires

Kenya’s job market is dynamic. When a new employee joins, you must register them for a KRA PIN if they don’t have one. You can’t file PAYE for them without it. Factor this into your onboarding process.

For employees leaving, you still need to file for them for their partial month’s salary. Enter their income and mark the end of employment. Also, remember to issue them with a P9 form at the end of the year (by 28th February). This is crucial for them to file their own annual returns.

Common Mistakes Kenyan Employers Make (And How to Avoid Them)

Seeing the same mistakes repeated in audits. Don’t be that employer.

Mistake 1: Mixing Up Personal Relief

Every employee gets a monthly personal relief of Ksh 2,400. The iTax form has a column for it. The biggest mistake is forgetting to enter it for each employee, which overstates the tax payable. You’ll end up paying KRA extra money from your own pocket. Check that column!

Mistake 2: Wrong Employee PINs

Entering one wrong digit in an employee’s PIN is like sending their tax payment to a stranger. The payment won’t reflect in their records, and they’ll get a nasty surprise when KRA says they haven’t paid tax. Always verify PINs with a copy of their certificate.

Mistake 3: Ignoring Benefits in Kind

If you give your staff house allowance, car benefits, or even a lunch allowance above the non-taxable limit, that’s taxable income. Many small businesses in towns like Nakuru or Eldoret forget to add these to the gross salary. KRA is cracking down on this. Include all benefits.

Beyond Monthly Filing: The Annual P9 and P10A

Your duty doesn’t end with monthly filings. By 28th February each year, you must:

1. Generate P9 Forms: For each employee who worked for you in the previous year (Jan-Dec). This summarizes their annual earnings and tax deducted. Give them a copy.
2. File the P10A Annual Return: This is a summary of ALL your P10s for the year. It reconciles your total remittances. File it on iTax under the annual returns section.

Missing the annual return attracts even heavier penalties. Mark your calendar for early February to start this process.

When to Get Professional Help

You can DIY your PAYE filing if you have a small, straightforward team. But consider hiring a tax agent or accountant if:

• You have more than 10 employees.
• Your payroll includes complex benefits, bonuses, or commissions.
• You’re constantly anxious about making errors.
• You’ve received a compliance notice from KRA.

The cost of a professional (from around Ksh 3,000 per month for small businesses) is often less than the cost of one penalty. It’s like hiring a boda boda to navigate a jam—you get to your destination faster and stress-free.

Filing PAYE tax returns as an employer in Kenya is a core part of running a legitimate business. It’s non-negotiable. The process on iTax is straightforward if you’re prepared, accurate, and most importantly, early. Remember the golden rules: file by the 5th to beat the system rush, double-check every employee PIN and figure, and always keep your receipts.

Master this monthly task, and you’ll keep KRA off your back and your employees’ records clean. Now, log into iTax and conquer that return. Got a specific PAYE headache? Drop a comment below—let’s help each other out.