Kenya

Value-added tax (VAT)

VAT is a tax on value addition and is accounted for using the input-output mechanism. In Kenya, there are currently three rates of VAT: 0% for zero-rated and exempt supplies, 8% for fuel and 16% of the taxable value of locally supplied and imported goods and services in any other case. 

VAT registration is required for persons (either Kenyan resident or non-residents that have a permanent establishment in Kenya) making or expecting to make taxable supplies of KES 5 million or more in a 12-month period. In determining the VAT registration threshold, the sale of capital assets and the sale of part or the whole of a business is excluded. A person making taxable supplies below the registration threshold may voluntarily apply for VAT registration upon meeting the certain requirements. However, there is no VAT registration threshold  for non-residents who supply services to Kenyans via an electronic network, the internet or a digital marketplace. 

Input tax on a taxable supply (or importation) may be deducted from the tax payable by a registered person to the extent that the supply was acquired to make taxable supplies. Input tax is allowable for deduction within six months after the end of the tax period in which the supply or importation occurred. To deduct input tax incurred on taxable supplies, a taxpayer must possess the requisite documentation supporting the input tax deduction. With effect from 1 July 2023, an additional condition in order to secure input tax recovery was introduced i.e. apart from holding the requisite documentation for recovering input tax, the taxpayer must also ensure that the supplier has declared the respective sales invoice in a VAT return. 

Taxable value is the consideration for the supply and includes any taxes (other than VAT), duties, levies, fees, and charges paid or payable on or by reason of the supply. 

The Tax Laws (Amendment) Act, 2024 (TLAA), effective from 27 December 2024, brought significant changes to the provisions in the VAT Act, including but not limited to: 

• changing the time of supply of exported goods to when the certificate of export or relevant export documents are available 

• amending the input tax apportionment formula by deleting the 90:10 rule that allowed for full deduction where the exempt supplies were less than 10%, and  

• exempting from VAT the 'transfer of a business as a going concern'. 

The Finance Act, 2025 amended Section 42 of the VAT Act, implying that all registered persons must issue a tax invoice at the time of supply, regardless of whether the supply is taxable or not. 

The Act also introduced a provision requiring taxpayers to pay VAT in cases where VAT exemption or zero-rating is used inconsistently with the purpose for which it was granted. 

The Finance Act, 2026 has reverted the timeline for applying for a refund of VAT paid on bad debts from two years back to three years. Additionally, the Act has amended Section 42 of the VAT Act to provide that an invoice showing an amount that purports to be tax may only be issued in respect of a taxable supply. 

Furthermore, the Finance Act, 2026 amended Section 13 of the VAT Act to clarify that where a supplier provides labour, outsourcing, or employee placement services and incurs employee-related costs (such as salaries, wages, and statutory deductions), those costs are deemed to be disbursements made on behalf of the client and are therefore excluded from the taxable value of the supply. 

The Act now also allows full input VAT deduction and refunds for input relating to exempt supplies made to the Kenya Defense Forces (KDF), Defense Forces Welfare Services (DEFWES), National Intelligence Service (NIS), and National Police Service (NPS), provided there are supporting documents and the input VAT is directly related to these supplies. 

Moreover, among the many other items made exempt are goods and services supplied for the direct and exclusive use in implementing infrastructure projects undertaken under a public-private partnership framework, subject to approval by the Cabinet Secretary on the recommendation of the Ministry responsible for project implementation. 

Finally, the Finance Act 2026 has amended the VAT treatment of financial services by narrowing the exemption previously granted to money-related services. While core money transfer services remain exempt, the Act now excludes digital payment processing, settlement, merchant acquiring, gateway, and aggregation services provided by payment service providers from this exemption. Consequently, these services will be subject to VAT, thereby bringing fintech companies and payment intermediaries under the VAT net.

VAT obligations for non-resident suppliers

Non-resident suppliers supplying electronically supplied services to Kenyans will need to adhere to the VAT (Electronic, Internet and Digital Marketplace Supply) Regulations, 2023.  

These regulations provide clarity on the nature of supplies subject to VAT, at the standard rate of 16%, when supplied electronically through an electronic network, the Internet, or a digital marketplace. A digital marketplace is defined as an online platform that enables users to sell goods or provide services to other users.  

A non-resident person supplying such taxable services is required to register for VAT in Kenya if the supplies are made to a recipient in Kenya in both business-to-consumer (B2C) transactions from April 2021 and business-to-business (B2B) transactions from 1 July 2022.  

Prior to enactment of the Finance Act, 2022 on 1 July 2022, the obligation to account for VAT on digital marketplace supplies for B2B supplies rested with the recipient in Kenya and was accounted for through the reverse-charge mechanism. 

The non-resident person shall register for tax through a simplified tax registration framework and will declare taxes payable on supplies made on the digital marketplace by filing a monthly VAT return. In addition, any VAT due to the Commissioner shall be paid on or before the 20th day of the month following the end of the month in which the service was supplied.  

These services include a wide variety of electronic services, such as downloadable digital content, e-books, subscription-based media, software programmes, cloud storage, distance teaching, and so on. For a full list of services that are included, please contact us. 

Import (customs) duty

Import duty is levied on goods imported into the East African Community under the provisions of the East African Community (EAC) Customs Management Act ('the Act'). Imported goods are generally subject to import duty at varied rates, i.e., a minimum duty rate of 0%, rates of 10% and 25%, and a maximum rate of 35% under the East African Community Common External Tariff (EAC CET) 2022. Sensitive products are subject to much higher rates.  

The East African Community Gazette, Vol. AT 1, No 16 (30 June 2026) (“EAC Gazette”) introduced further amendments to the EAC CET, effective 1 July 2026. For Kenya, the Gazette provides for a 0% duty rate on goods imported for the direct and exclusive use in the implementation of infrastructure projects undertaken under a public-private partnership framework, subject to approval by the Cabinet Secretary responsible for the National Treasury on the recommendation of the ministry responsible for the project. 

The EAC Gazette also provides for higher duty rates on selected imports including: mobile phones of tariff headings 8517.13.00 and 8517.14.00, which in Kenya moved from 0% to 25% for the next one year; optical fibre cables of tariff heading 8544.70.00; road tractors, trailers and semi-trailers of tariff headings 8701 and 8716; iron and steel and their articles of Chapters 72 and 73; containers for compressed or liquefied gas of tariff heading 7311.00.10; LPG stoves of tariff heading 7321.11.00; lubricants of tariff heading 2710.19.51; lubricating greases of tariff heading 2710.19.52; crude palm oil of tariff heading 1511.10.00; motor vehicles of tariff headings 8702, 8703, and 8704; baby diapers of tariff heading 9619.00.90; furniture of heading 9403; and selected wood products of headings 4410, 4411, and 4412.

In addition, import duty on certain recorded software media under tariff headings 8523.29.20, 8523.49.10, and 8523.80.10 increased from 0% to 10%, while smart cards recorded with software remain subject to 0% duty. 

The EAC Gazette also provides for lower duty rates on: lithium-ion batteries of tariff heading 8507.60.00; rice of tariff heading 1006; worn clothing of tariff heading 6309.00.10; and dates of tariff heading 0804.10.00 for January and February 2027. In addition, the Council approved one-year duty remissions on specified raw materials and industrial inputs, including those used in the assembly or manufacture of smart telecommunication devices including laptops and tablets, manufacture of leather goods, manufacture of animal feeds, and other approved industrial uses. 

The EAC Gazette also maintained the stay of application of the conditions attached to duty remission for completely knocked down motorcycle kits, thereby allowing motorcycle assemblers to continue enjoying the remission. In addition, the Fifth Schedule to the EACCMA was amended to extend import duty exemption to goods imported for official use by National Intelligence Services Agencies and specialised paper imported by airlines exclusively for printing boarding passes. 

Excise duty

Excise duty is imposed on the local manufacture, importation or local supply of certain commodities and services. Excisable commodities include bottled water, soft drinks, cigarettes, alcohol, fuels, and motor vehicles. Excisable services include telephone and Internet data services, fees charged for money transfer services, and other fees charged by financial institutions. 

The Tax Laws Amendment Act, 2020 revised the Excise Duty Act, Cap 472 by amending the definition of ‘other fees’ earned by financial institutions to exclude other fees earned from non-licensed activities. This change reduced disputes with the tax authority on what ‘other fees’ should be subject to excise duty. 

The Excise Duty Act defines the word ‘licence’ to mean the following: 

• In the case of excisable services, ‘licence’ refers to the certificate of registration. 

• In the case of excisable goods, ‘licence’ refers to the licence issued under section 17 of the Excise Duty Act. 

• In the case of carrying out of any other activity in Kenya for which the Commissioner General for the KRA may impose a requirement for licence, ‘licence’ refers to the licence required under section 15(1)(e). 

The Finance Act, 2021 re-introduced excise duty on betting and gaming at the rate of 7.5% of the amount wagered or staked, while the Finance Act, 2022 exempted horse racing. 

The Finance Act, 2023 amended the excise duty rates for various excisable services, including the following: 

• 20% to 15% for telephone and Internet data services. 

• 20% to 15% for fees charged for money transfer services by banks, money transfer agencies, and other financial service providers. 

• 12% to 15% for money transfers by cellular phone service providers and payment service providers. 

• 15% for alcoholic beverages and gaming advertisements on television, print media, billboards, and radio stations. 

Prior to the Finance Act, 2023, the Excise Duty Act contained a requirement for annual inflationary adjustment on excise duty rates. The provision on annual inflationary adjustment was deleted by the Finance Act, 2023, effective 1 July 2023. 

The Finance Act, 2023 further provided clarity on offences relating to excise stamps and other markings.  

The Tax Laws (Amendment) Act, 2024 (TLAA), effective from 27 December 2024, brought significant changes to the provisions in the Excise Duty Act, including but not limited to the following:   

• Introducing a definition of a ’digital lender‘ to provide legislative clarity and formal recognition for digital lenders, ensuring they operate within a defined legal framework. A ’digital lender‘ is defined to mean ’a person holding a valid digital credit providers licence issued by the Central Bank of Kenya’. 

• Introducing excise duty on excisable services offered by a non-resident through a digital platform. 

• Amending the time frame for paying excise duty on alcoholic beverages. Prior to the change, excise duty had to be paid within 24 hours of removing the goods from the factory. The change extends the time frame to the fifth day of the following month after the transaction. 

• Amended Part 1 of the First Schedule of the Excise Duty Act to exclude ‘fertilised eggs for incubation’ from the ambit of excise duty. 

• Introducing excise duty on the following goods previously not subjected to this tax:  

• Imported ceramic sinks, wash basins, wash basin pedestals, baths, bidets, water closet pans, flushing customs cisterns, urinals, and similar sanitary fixtures of tariff heading 69.10 at the rate of 35% of the customs value or KES 100 per kg. 

• Imported float glass and surface ground or polished glass, in sheets, whether or not having an absorbent, reflecting, or non-reflecting layer, but not otherwise worked of tariff heading 70.05 at the rate of 35% of the customs value or KES 200 per kg. 

• Imported ceramic flags and paving, hearth, or wall tiles; unglazed ceramic mosaic cubes and the like, whether or not on a backing; finishing ceramics of tariff 69.07 at the rate of 35% of the customs value or KES 300 per kg.  

• Coal at the rate of 5% of the value or KES 27,000 per metric tonne. 

• The TLAA further amended Part III of the First Schedule to the Excise Duty Act to interpret fees charged by digital lenders to include “any fees, charges, or commissions charged by digital lenders relating to their licensed activities but does not include interest, preloan interest, post-loan interest, return on loan or any share of profit, or an insurance premium or premium based or related commissions specified in the insurance Act or regulations made thereunder”. 

The Finance Act, 2025 brought significant changes to the provisions in the Excise Duty Act. Some of the notable amendments include: 

• Amendment of the definition of ‘digital lender’ to mean a person extending credit through an electronic medium but does not include a bank licensed under the Banking Act, a Sacco Society registered under the Co-operative Societies Act, or a microfinance institution licensed under the Microfinance Act. 

• Introduction of ‘digital marketplace’ definition to mean an online or electronic platform that enables users to sell or provide services, goods, or other property to other users. 

• Amendment to activities requiring excise licence to include the importation, distribution, or handling of methanol and ethanol in Kenya. 

• Imposition of excise duty on the following goods not originating from East African Community Partner States at the rate of 25% of excisable value or KES 200 per kg, whichever is higher: 

• Imported other self-adhesive materials of tariff number 3919.90.90. 

• Imported printed polymers of ethylene of tariff number 3920.10.90. 

• Imported printed polymers of vinyl chloride containing by weight not less than 6% of other. 

• Plastics of tariff number 3920.43.90. 

• Imported printed poly (ethylene terephthalate) of tariff 3920.62.90. 

• Imported printed cellular of other plastics of other plates, sheets, film, foil, and strip of tariff number 3921.19.90. 

• Printed self-adhesive paper of tariff number 4811.41.90. 

• Gummed paper and paperboard of tariff number 4811.49.00. 

• Imposition of excise duty on the following kraft paper products not originating from East African Community Partner States at the rate of 25% of excisable value or KES 50 per kg, whichever is higher:  

• Imported uncoated kraft paper and paperboard, in rolls or sheets; kraftliner; unbleached of tariff number 4804.11.00.  

• Imported other kraft paper or paperboard weighing 150g/m² or less, in rolls or sheets; unbleached of tariff number 4804.31.00.  

• Imported other kraft paper or paperboard weighing more than 150g/m² but less than 225 g/m², in rolls or sheets; unbleached of tariff number 4804.41.00. 

• Imposition of excise duty on the following glass products not originating from East African Community Partner States at the rate of 35% of excisable value or KES 500 per kg, whichever is higher: 

• Imported glass of heading 70.03, 70.04, or 70.05, bent, edge-worked, engraved, drilled, enamelled, or otherwise worked, but not framed or fitted with other materials, of tariff heading 70.06.  

• Imported safety glass of tariff numbers 7007.19.00 and 7007.29.00.  

• Imported multiple-walled insulating units of glass of tariff heading 70.08. 

• Imposition of excise duty at a reduced rate of 5% on certain betting and gambling activities. 

• Imposition of excise duty on fees charged on virtual asset transactions by virtual asset providers at 10% of the excisable value. 

The Finance Act, 2026 brought further changes to the Excise Duty Act, including the following: 

• Introduction of excise duty on antique, vintage and classic vehicles at 50% of the excisable value. 

• Increase in excise duty on imported sugar from KES 7.50 to KES 40 per kg. 

• Introduction of excise duty at 30% of the excisable value on imported wood and timber products, including MDF, particle boards, block boards, plywood and timber. 

• Introduction of excise duty on imported plastic sheeting and advertising materials, and on imported sanitary fittings such as shower heads, at rates of up to 35%. 

• Introduction of a two-tier excise structure on fruit and vegetable juices, with sweetened juices taxed at KES 20 per litre and unsweetened juices remaining at KES 14.14 per litre. 

• Increase in excise duty rates on tobacco products and introduction of excise duty on smokeless tobacco products (snus) at KES 2,000 per kg. 

• Reduction of the excise duty rate on extra neutral alcohol purchased by licensed manufacturers of spirituous beverages from KES 500 per litre to KES 80 per litre. 

• Removal of excise duty on bottled and similarly packaged drinking water. 

• Broadening of the excise duty base on betting and gaming to cover any amount deposited or otherwise made available for betting or gambling purposes including horse racing events. 

Stamp duty

Stamp duty is payable on transfer of properties, leases, and securities. The rates of stamp duty apply as specified in the Schedule to the Stamp Duty Act.

The rates of stamp duty are shown below:

The Finance Act, 2026 amended Section 96A of the Stamp Duty Act to extend stamp duty relief to instruments that transfer a beneficial interest in property from a person or persons to a real estate investment trust (REIT) registered by the Commissioner. 

Capital gains tax (CGT)

Gains derived on the sale or transfer of property by an individual or company are subject to a final tax at the rate of 15%. The definition of ‘property’ is widely drawn and includes securities in Kenyan resident private companies (though a specific exemption from CGT exists for securities listed in Kenya). 

The High Court has ruled that the Income Tax Act (ITA) cannot impose an obligation on a taxpayer to pay CGT on or before presenting a transfer instrument for registration as opposed to upon registration of the transfer instrument. The KRA has appealed the Court's ruling. No final decision is available at this date. 

In addition, an exemption is granted where the transfer of property is triggered by a change in law, a government directive, internal restructuring within a group (with the exclusion of a transfer to a third party), or a transfer made in public interest (the latter being subject to the Cabinet Secretary's approval) from CGT. 

The Finance Act, 2023 introduced a tax on gains from the sale of shares or comparable interests if, 365 days before the sale, more than 20% of their value directly or indirectly comes from immovable property in Kenya. This aims to subject such gains to taxation if they are significantly tied to Kenyan immovable property. 

The Finance Act also amended the ITA to change the timing of CGT payment. Under the amendment, CGT will be paid at the earlier occurrence of either the vendor receiving the full purchase price or the registration of the transfer. 

The Tax Laws (Amendment) Act, 2024 reduced the CGT rate from 15% to 5% for transactions certified by Nairobi International Financial Centre Authority (NIFCA) under the third schedule. NIFCA must certify that a firm has invested at least KES 3 billion in at least one entity incorporated or registered in Kenya within a period of two years and the transfer of the investment is to be made after five years of the date of the investment. 

The Finance Act, 2026 extended capital gains tax to gains derived by a non-resident person from the alienation of shares that derive their value from Kenya, or where the alienation results in a change of group membership of a Kenyan resident company or of ownership of, title in, or interest in property located in Kenya. 

The Finance Act, 2026 also exempted from capital gains tax gains relating to the transfer of property to a real estate investment trust (REIT) registered by the Commissioner under section 20(1) of the ITA.

Payroll taxes

Payroll taxes are administered through the Pay-As-You-Earn (PAYE) mechanism of deducting income tax from employment income (salaries, wages, bonuses, commissions, etc.). PAYE also applies to taxable non-cash benefits. 

It is the employers’ obligation to deduct and account for payroll taxes on a monthly basis. 

The PAYE deducted thereof should be paid to the KRA by the 9th day of the following month. 

The employer should submit a monthly PAYE return (can be filed online using the KRA’s electronic platform, i-Tax). This return, known as form P10, declares the PAYE for a specific month. 

The Finance Act, 2026 introduced several notable changes to the employment tax framework under the Income Tax Act. First, it amended section 5(1) to clarify that income earned by a non-resident individual employed by, or engaged on behalf of, a resident air transport operator designated as Kenya’s national carrier will not be deemed to accrue in or be derived from Kenya to the extent that the income relates to duties performed outside Kenya and those duties are connected to the operator’s international transport operations.

The Act also introduced a new exemption under section 5(4)(ga) for gratuity contributions relating to employment or services rendered, provided the gratuity relates to a contract of service of at least three years including renewal or extension of such contract beyond three years, and the gratuity paid does not exceed 31% of the employee’s emoluments during the contract period.

Further, an amendment to Part I of the First Schedule to the Act now exempts from tax pension benefits paid to dependants or beneficiaries upon the death of a member, thereby preserving retirement savings for beneficiaries without tax leakage and aligning the treatment of death benefits with similar tax-exempt benefits, such as ill-health exit payments.

The tax tables applicable to individuals are provided in the Taxes on personal income section of Kenya’s Individual tax summary.

Employers’ National Social Security Fund (NSSF) contributions

The National Social Security Fund Act No. 45 of 2013 ('the NSSF Act 2013' or 'the new Act') was assented in 2013 and came into force on 10 January 2014. However, its implementation was suspended almost immediately following a consolidated petition filed in 2014. 

On 3 February 2023, the Court of Appeal upheld the provisions of the NSSF Act 2013, and NSSF confirmed through a press release issued on 9 February 2023 that the new Act was effective commencing February 2023. 

The updated NSSF rates

The NSSF Act 2013 introduced enhanced NSSF contributions at the rate of 12% of an employee's pensionable earnings. This is made up of equal portions of 6% from the employee and 6% from the employer. Pensionable earnings have been defined under the Act as the lower of an employee’s monthly wages and the upper earnings limit (UEL). 

As per the Act, the lower earnings limit (LEL) and the UEL will be graduated for the first four years of implementation. For the first year beginning February 2023, the LEL was KES 6,000 while the UEL was KES 18,000. From February 2024, the LEL was increased to KES 7,000 while the UEL was revised to KES 36,000. 

Effective February 2025, under the third year of implementation, the Lower Earnings Limit (LEL) increased to KES 8,000 while the Upper Earnings Limit (UEL) increased to KES 72,000. Consequently, employees earning KES 72,000 and above were subject to a maximum monthly NSSF contribution of KES 4,320, with the employer required to match the same amount, resulting in a combined maximum monthly contribution of KES 8,640 per employee. 

Effective February 2026, under the fourth year of implementation, the LEL increased to KES 9,000 while the UEL increased to KES 108,000. Accordingly, the maximum monthly NSSF contribution increased to KES 6,480 each for the employee and the employer, resulting in a combined maximum monthly contribution of KES 12,960 per employee. 

Tier I and Tier II contributions 

The contributions to NSSF are classified into two categories: 

• Tier I contributions are 6% of the current Lower Earnings Limit (LEL) of KES 9,000, resulting in monthly contributions of KES 540 each by the employer and employee. 

• Tier II contributions are 6% of the difference between the Upper Earnings Limit (UEL) and the LEL. Based on the current UEL of KES 108,000 and LEL of KES 9,000, Tier II is calculated on KES 99,000, resulting in monthly contributions of KES 5,940 each by the employer and employee. 

From February 2027, the UEL is expected to align with the national average earnings published by the Kenya National Bureau of Statistics. 

Opt out for Tier II contributions

The Act provides that an employer may opt to pay the Tier II contributions into an approved 'contracted-out scheme' (i.e. occupational or private pension scheme that the employer participates in or intends to establish). 

The application for contracting out should be submitted in writing to the Retirement Benefits Authority (RBA), accompanied by the prescribed forms and supporting documentation, at least 60 days before the opting out date. 

Social Health Insurance Fund (SHIF)

The Social Health Insurance Act, 2024 (SHIA) replaced the National Insurance Fund (NHIF) with a universal registration and contribution system for all Kenyan residents, including provisions for vulnerable populations. It details matters concerning benefits, tariffs, empanelment, contracting, and claims management. The Social Health Insurance Tribunal Procedure Rules, 2024 provide for dispute resolution mechanisms, including alternative dispute mechanisms. The Social Health Insurance Regulations, 2024 establish and manage various health funds and outline registration, empanelment, and benefits. The Social Health Insurance (Amendment) Regulations, 2024 define specialised health care services and provide transition timelines from NHIF to the new system. 

Payments of contributions and subsequent access to healthcare services commenced on 1 October 2024. 

Households with income from salaried employment shall contribute 2.75% of their gross salary or wage to the SHIF for each month. It is the employer’s obligation to deduct and remit the employees’ contributions to the Social Health Authority (SHA) by the 9th day of the following month. 

The Tax Laws (Amendment) Act, 2024 amended section 15(2) of the Income Tax Act to include contributions made to the SHIF as allowable deductions.

Affordable Housing Levy (AHL)

Initially introduced in July 2023 under section 31B of the Employment Act, 2007 by the Finance Act, 2023, the AHL was nullified by the courts on 28 November 2023. Later, the levy was reintroduced through the Affordable Housing Act, 2024, effective March 2024. 

According to this Act, employers are required to deduct and remit the AHL at the rate of: 

• 1.5% of the employee’s gross monthly salary for the employees, and 

• 1.5% of the employee’s gross monthly salary for the employer. 

The levy must be remitted within nine working days after the end of the month in which payments are due. If the payment is delayed, a penalty of 3% of the unpaid amount will be imposed for each month. 

Gross monthly salary constitutes basic salary and regular cash allowances. This includes housing, travel or commute, car allowances, and such regular cash payments, and excludes non-cash payments and irregular payments, such as leave allowance, bonus, gratuity, pension, severance pay, or any other terminal dues and benefits. 

The AHL applies to both salaried and non-salaried individuals, requiring all persons who receive income or whose income is accrued in Kenya to remit 1.5% of their gross income as AHL. 

Additionally, the TLAA amended section 15(2) of the ITA to make AHL contributions by employees deductible for PAYE purposes, allowing employees to reduce their taxable income by the amount contributed towards AHL. 

Business permit

Every person who carries on a business in Kenya is required to apply for a business permit from the relevant local authority. The business permit is usually based on the size of one’s business and is renewable on an annual basis.

Standards levy

The Standards (Standards Levy) Order, 2025 (Legal Notice No. 136 of 2025) (‘the Order‘) introduced notable changes in the application of the standards levy to all manufacturers (defined as those who offer for sale a product or a service specified in the Order). 

The new Order revised the threshold for exemption from the levy. Previously, manufacturers with an ex-factory value of KES 200,000 or less per year qualified for the exemption. Under the new Order, the exemption will only apply to manufacturers with an annual turnover of KES 5 million or less. 

The new Order also introduced a cap on the levy payable, increasing it from KES 400,000 per annum to KES 4 million per annum for a period of five years, and KES 6 million per annum thereafter.  

It also abolished the minimum levy payable per month. 

The new Order expanded the list of specific manufacturing activities as detailed under six broad classes of manufacturing in the First Schedule to the Order. Some of the new activities within scope include network and fibre installation, medical and laboratory equipment installation, as well as assemblers. 

Monthly returns must now be filed by the 20th day of the month following the transaction, with the levy paid through  iTax. This replaces the prior practise of submitting returns to the KEBS Director and paying by the 30th day of the following month. Further, each manufacturer is required to apply for and be issued with an annual certificate of compliance, which remains valid for one year and is subject to cancellation in the event of non-compliance. 

Tourism levy

The tourism levy is payable to the Tourism Fund by establishments dealing in tourism activities and services as listed in the Tourism Act at a rate of 2% of turnover.

National Industrial Training Levy (NITA) contributions

All employers are required to pay to the Directorate of Industrial Training a monthly levy of KES 50 per employee. The only exemption from NITA is new employers who registered their business after 23 December 2019 and have less than 100 employees. Such employers are exempted for a period of 12 months from the date of registration. 

Employers are required to file and pay the NITA levy through the iTax system when submitting monthly PAYE returns. As such, the due date for NITA is the 9th day of the month following the payroll month. Failure to remit NITA on time attracts a penalty of 5% per month on the outstanding amounts on a pro-rata basis. 

Railway Development Levy (RDL)

RDL is payable on importation of goods into Kenya. It is calculated at the rate of 2% of the declared customs value. 

Effective 1 July 2026, the Finance Act, 2026 narrowed the exemption from RDL for aviation-related imports so that it now applies only to all parts of Chapter 88 and goods of tariff headings 8802.30.00 and 8802.40.00. There is also an exemption from RDL for goods imported for the construction of liquefied petroleum gas (LPG) storage tanks and related infrastructure, subject to a minimum investment value of KES 5 billion and upon the recommendation of the Cabinet Secretary responsible for energy. 

Import Declaration Fee (IDF)

The IDF is payable on importation of goods into Kenya. It is calculated at the rate of 2.5% of the declared customs value. 

Effective 1 July 2026, the Finance Act 2026 narrowed the exemption from (IDF) for aviation-related imports. The exemption now applies only to all parts of Chapter 88 and goods of tariff headings 8802.30.00 and 8802.40.00. There is also an exemption from IDF for goods imported for the construction of liquefied petroleum gas (LPG) storage tanks and related infrastructure, subject to a minimum investment value of KES 5 billion upon the recommendation of the Cabinet Secretary responsible for energy. 

Export and investment promotion levy (EIPL)

EIPL applies at the rate of 3%, 10% and 17.5% of the customs value for specified imported products. Products subject to EIPL at 17.5% include cement clinker (tariff no. 2523.10.00) and items of iron and steel of Chapter 72 of the EAC CET.   

Certain articles of paper pulp, of paper, or of paperboard of Chapter 48 are subject to EIPLS at 10%. Ceramic products of tariff headings 69.07 and 69.10 attract EIPL at a rate of 3%. 

Advance tax on motor vehicles

Advance tax is payable at varying annual rates depending on the motor vehicles and is creditable against any CIT payable for the year.

Fringe benefit tax (FBT)

FBT is payable by an employer on low (or free) interest loans granted to employees, company directors, or their relatives. FBT is due whether or not the employer is exempt from tax.

The taxable benefit is the difference between the actual interest charged and the interest computed using the Commissioner’s prescribed rate, published quarterly. The FBT is borne entirely by the employer, and neither the directors nor the employees are personally taxed on the benefit.

Previously, the Income Tax Act provided that fringe benefits were to be taxed at the resident corporate tax rate. However, the Tax Laws (Amendment) Act, 2024 repealed this provision, creating a legal gap as FBT remained chargeable under the Act, but the applicable tax rate had been deleted. To correct this omission, the Finance Act, 2025 introduced paragraph 15 under the Third Schedule, which provides that fringe benefits shall be taxed at the resident corporate tax rate applicable for that year of income (currently 30%, effective January 2021).

Betting, lottery, and gaming taxes

The Finance Act, 2019 introduced a 20% excise duty on the amounts wagered or staked in betting activities. 

Furthermore, under the Betting, Lotteries, and Gaming Act, there is an additional turnover tax on lottery and gaming at 15%. 

The Finance Act, 2023 amended the Betting, Lotteries and Gaming Act to provide that taxes under sections 29A, 44A, 55A, and 59B will be collected following the procedures outlined in the Tax Procedures Act of 2015. This provision ensures that the collection of these specific taxes is carried out in accordance with the guidelines and regulations set forth in the Tax Procedures Act, promoting consistency and adherence to established tax collection practices. 

The Finance Act, 2025 reduced the excise duty on amounts wagered or staked on certain betting activities, including betting (excluding horse racing), gaming, prize competition, and lottery (excluding charitable lotteries), to 5%. 

The Finance Act, 2026 broadened the excise duty base on betting and gaming by removing the exclusion for horse racing, bringing it within the scope of the 5% excise duty. 

In addition, the Finance Act, 2026 reintroduced withholding tax on winnings from betting, lottery and prize competitions at the rate of 20% for both residents and non-residents. “Winnings” is defined as a payout from a lottery or prize competition by a person licensed under the Gambling Control Act, 2025. 

Local government rent and rates

Rent and rates are levied annually on properties in Kenya, and the rateable value that is payable to the county government shall vary in each county based on various forms of ratings, such as area rate, agricultural rental value, or site value.