It’s that time of the year again. The January rush is over, the short rains have come and gone, and your social media feed is full of people talking about KRA deadlines. You’re left wondering, “Hii story ya tax returns, does it really apply to me?” If you’re employed, run a side hustle, or just trying to figure out adulting, this confusion is real.
Let’s break it down, no legal jargon. This article will clearly show you who is required to file tax returns in Kenya and, just as importantly, who gets a free pass. We’ll cover the rules for employees, business owners, and even those with rental income, so you can know your position and avoid those nasty KRA penalties.
What Does Filing a Tax Return Actually Mean?
First, let’s demystify the term. Filing a tax return is simply you telling the Kenya Revenue Authority (KRA) about your income, expenses, and taxes for a whole year. That year runs from 1st January to 31st December. Think of it as your annual financial report card to the government.
You do this by filling and submitting the ITR (Income Tax Return) form on the KRA’s iTax platform. It’s not just about paying more tax. It’s about regularising your status, claiming refunds if you overpaid, and staying compliant. Non-compliance? That’s a straight path to penalties, interest, and even a travel ban.
Who Is Required to File Tax Returns in Kenya? (The Must-File List)
The law is specific. If you fall into any of these categories, you have no choice. Mark the 30th June deadline on your calendar.
1. Every Employed Person with a KRA PIN
Yes, even if your employer deducts PAYE. This is the biggest shocker for many salaried Kenyans in Nairobi, Mombasa, or anywhere else. Your employer withholds tax, but you are still legally required to declare that same income via a return. It confirms that what your employer reported matches your records.
This includes anyone with a payslip from a company, NGO, or government institution. If you have a KRA PIN and earned a salary, you file.
2. Business Owners & The Self-Employed
This one is obvious but crucial. If you run a business—whether it’s a licensed SME in Nairobi’s CBD, a freelance graphic design hustle, or a M-Pesa shop in Eldoret—you must file. This covers income from partnerships, sole proprietorships, and professional practices (doctors, lawyers, consultants).
You’ll declare your gross turnover, allowable business expenses, and calculate your tax due. Keeping your receipts from suppliers, like those from Nairobi’s River Road or your local wholesaler, is not optional; it’s essential for this.
3. Landlords with Rental Income
Renting out property in Kenya? That income is taxable. Whether it’s a single room in Umoja or a commercial building in Kisumu, if you earn over KES 288,000 annually from rent (that’s KES 24,000 per month), you must file a return and pay tax. The residential rental income tax is a flat 10% of the gross rent.
Local Tip: Many landlords forget to claim allowable expenses like agent fees, repair costs (think plumbing issues during the long rains), or service charges. These can reduce your taxable income.
4. Individuals with Other Taxable Income
Your 9-5 might not be your only cash stream. Other incomes that mandate filing include:
- Investment Income: Dividends (beyond the withheld tax) and interest from banks.
- Capital Gains: Profit from selling property, shares, or other assets.
- Pension: If you receive a lump-sum pension payment.
- Income from Digital Marketplaces: Earnings from platforms like Upwork or Fiverr.
The Lucky Ones: Who Is Exempt from Filing?
Not everyone needs to stress about the iTax login. Here are the exemptions as per Kenyan law. If you fit here, you can breathe easy.
1. Individuals with Only Employment Income & One Employer
This is the key exemption for employees. You are exempt if:
- Your only source of income is employment (no side hustle, no rent).
- You worked for only one employer for the entire year.
- Your employer has already deducted and remitted all your due PAYE.
But be honest. That YouTube channel, the mitumba business you run on Instagram, or the plot you lease? That disqualifies you. You’re back in the “must-file” group.
2. Those Below the Taxable Threshold
If your annual income from all sources is below the personal relief threshold (currently KES 288,000 per year), you may not have tax to pay. However, if you have a KRA PIN and any income at all, it’s still good practice to file a nil return to stay compliant, especially if you plan on applying for loans or tenders in future.
3. Specific Allowances & Benefits
Some incomes are wholly exempt and don’t need to be declared in a return. These include:
- Official duty allowances (like per diems for work travel).
- Interest from KRA-approved tax-free savings accounts.
- Compensation for personal injury.
- Income specifically exempted by the Finance Act.
Navigating iTax: A Kenyan Reality Check
Let’s get practical. Filing happens on iTax. We all know the struggle: the site crashing as the June deadline nears, or the panic of forgetting your password. Here’s how to navigate it like a pro.
Don’t Wait for the Last Minute: Aim to file by early June. The last-week rush, combined with maybe a slow internet connection during a rainy evening, is a recipe for stress and potential penalties.
Have Your Documents Ready: You’ll need your payslip(s), P9 form from your employer (shows your annual tax summary), rent income records, and business expense receipts. Scan them and save them on your phone or computer for easy reference.
Use the Simba System for Help: Stuck? The KRA has the SIMBA (System for Integrated Management of Business and Agents) centres. You can visit one, like the one at Times Tower or in major towns, and get assisted filing for a small fee. Sometimes, it’s worth the KES 500 to have an expert help you through it.
What Happens If You Don’t File? The Real Consequences
Ignoring this is not an option. The penalties are severe and automated on iTax.
- Immediate Penalty: KES 10,000 for late filing or failure to file.
- Monthly Interest: 1% per month on any unpaid tax. This compounds quickly.
- Travel Ban: KRA can recommend a travel ban to the Immigration Department, stopping you at the airport—imagine missing that trip or crucial business travel!
- Difficulty in Business: You cannot participate in government tenders, and your compliance certificate will be invalid, affecting your ability to get loans or licenses.
Key Takeaways and Your Next Step
Understanding who is required to file tax returns in Kenya saves you from future headaches. The rule of thumb: if you have multiple income streams, run a business, or have rental income, you must file. The classic “one employer, one job” employee might be exempt, but only if that’s truly their only income.
The process, while daunting, is manageable. Start early, gather your documents, and use available resources like the KRA SIMBA centres. Treat it like a necessary annual ritual, just like servicing your car before a long trip. Staying compliant keeps your financial record clean and opens doors for future opportunities.
Was this guide helpful? Share it with your WhatsApp group or your colleague at the office who’s also confused. Got a specific question? Drop it in the comments below, and let’s discuss!