KRA Corporation Tax Calculator

Background.

A Kenyan company with a December year end has two dates to plan around. Its balance of corporation tax is due by 30 April, the last day of the fourth month after the year closes, and its return by 30 June, the end of the sixth month. During the year itself it has usually paid most of the tax already, in four instalments. Working out what is still owed means taking the year's tax, then knocking off what customers withheld and what the company paid in advance.

That is the sequence followed here. Taxable profit times the rate gives gross corporation tax: for a resident company KRA's rate is 30%, so KSh 12.5 million of taxable profit carries KSh 3.75 million of tax. Withholding tax credits and the instalments already paid come off that, leaving the balance to pay with the return, or an overpayment if the advances were too large.

The same inputs also answer the planning question the finance team faces at the start of a year: how big should each instalment be? KRA allows two bases. On the prior-year basis, last year's tax is multiplied by 110% and split into equal parts. On the current-year basis, this year's estimated tax is split instead, which suits a new company or one coming out of losses. Both figures are shown side by side.

The arithmetic is simple; the input is not. Taxable profit is the figure from a tax computation, after disallowable expenses are added back, capital allowances replace depreciation and any losses brought forward are used, and it can be very different from the profit in the accounts. Nor is the rate inferred; you enter it: 30% covers an ordinary resident company, while companies in incentive regimes need the rate that the law applies to them. A branch of a foreign company is also at 30% from the 2024 year of income, and the 15% tax on repatriated income is separate and is not included here.

What is kra corporation tax calculator?

Corporation tax is the income tax a company pays on its taxable profit for an accounting period. Under the Income Tax Act, taxable income is gross income less expenses wholly and exclusively incurred in producing it, adjusted by the Act's own rules on capital allowances, disallowed items and losses. The rate is 30% for a resident company. A non-resident company taxed through a Kenyan branch or other permanent establishment paid 37.5% until the 2023 year of income, but the Third Schedule to the Income Tax Act sets 30% from the 2024 year of income, with a separate 15% tax on income repatriated to the head office (section 7B); KRA's own filing pages still print the older 37.5% figure. A company is resident if it is incorporated in Kenya, if its management and control were exercised in Kenya during the year, or if the Cabinet Secretary has declared it resident by notice in the Gazette. Instalment tax is corporation tax paid in advance during the year: any company whose tax for the year is expected to exceed KSh 40,000 pays it in four equal parts, 25% by the 20th day of the 4th, 6th, 9th and 12th months of its accounting period. Companies in agriculture instead pay 75% by the 20th day of the 9th month and 25% by the 20th day of the 12th. Businesses on turnover tax do not pay instalment tax. The year's return is form IT2C, filed on iTax.

How to use this calculator.

1. 01Enter taxable profit before corporation tax, taken from the tax computation rather than straight from the income statement. If you only have accounting profit, the result is a rough indication at best.
2. 02Enter the corporation tax rate that applies to the company: 30 for an ordinary resident company. Residence depends on where the company was incorporated or where it is managed and controlled, not on who owns its shares, so a Kenyan-incorporated subsidiary of a foreign group is resident. A Kenyan branch of a foreign company also enters 30% for the 2024 year of income onward (the old 37.5% applied before that); the 15% tax on repatriated income is separate and not computed here. A company under a special regime should enter the rate confirmed by its tax adviser.
3. 03Enter tax credits: withholding tax deducted from payments to the company and shown on the withholding certificates KRA issues through iTax, plus any other credit the company can document.
4. 04Enter the instalment tax already paid for this accounting period, from the iTax payment records.
5. 05For instalment planning, enter last year's corporation tax as prior year tax, and set the number of instalments, normally 4. Compare the prior-year and current-year figures before deciding what to pay.

The formula.

Gross corporation tax = P × r ÷ 100, where P is taxable profit in KSh and r is the rate you enter as a percentage. The balance of tax payable = gross tax − tax credits − instalment tax paid. Nothing stops the balance going below zero: a negative figure means the credits and advance payments exceed the year's tax. Credits and expenses work very differently here: a shilling of withholding credit takes a full shilling off the balance, while a shilling of extra deductible expense only takes off r ÷ 100 of a shilling, 30 cents at the resident rate, because it works through profit rather than through tax.

The instalment figures come from two separate starting points. On the current-year basis, each instalment = gross tax ÷ n, where n is the number of instalments; on the default of four, each is a quarter of this year's tax. On the prior-year basis, the target = prior year tax × 110%, and each instalment = target ÷ n. The 10% uplift assumes profits tend to grow, and it lets a company pay on a known figure early in the year, before its current results are clear. A company whose profits have fallen will usually find the current-year figure lower; one growing fast will find the prior-year figure lower.

Three limits are worth knowing. The current-year instalment is worked out on gross tax, before withholding credits, so it is a figure for the whole liability rather than for the cash that will still be due after credits. The instalments are equal parts, which matches the standard 25% schedule but not the agricultural 75/25 split; for a farming company, multiply one instalment by three to see the payment due in the 9th month. And the rate is applied as a single flat percentage, so it cannot model a company whose income falls under two different rates. The rate must be between 0 and 100, and the number of instalments between 1 and 12.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Kenya Revenue Authority (n.d.). Filing & Paying Taxes: Companies and Partnerships. KRA.
2. [2]Kenya Revenue Authority (2021). Understanding Corporate Income Tax. KRA.
3. [3]Kenya Law (2024). Income Tax Act, Cap. 470. National Council for Law Reporting.
4. [4]Kenya Revenue Authority (n.d.). General Tax Compliance: What You Need to Know. KRA Knowledge Base.
5. [5]Kenya Revenue Authority (n.d.). File & Pay: Types of Taxes. KRA.
6. [6]Kenya Revenue Authority (2024). Income Tax Act, Revised Edition. KRA PDF.