Turnover tax or income tax: which costs your Kenyan business less?
Compare 1.5% turnover tax with normal income tax on your real profit, and see whether you must register for VAT.
How to read the result
Turnover tax is charged on gross sales, so your expenses make no difference. Normal income tax is charged on profit, so thin-margin businesses can pay less under income tax even though the rate looks higher. This tool compares the two on your numbers.
Turnover tax applies to resident businesses with yearly turnover between KES 1 million and KES 25 million. VAT registration becomes compulsory once taxable sales reach KES 5 million, so a business can be a turnover-tax payer and a VAT registrant at once.
The tool assumes all sales are standard-rated for VAT and expenses are VAT-inclusive. Individual rates use the annual bands and personal relief.
See how VAT registration interacts with turnover tax in the VAT registration guide, and work out the VAT itself with the VAT calculator.
Common questions
What is the turnover tax rate?
KRA now charges 1.5% of gross sales. It was 3% before it was reduced. Check the KRA site for the current rate before you decide.
Can I deduct expenses under turnover tax?
No. It is charged on gross turnover. That is why businesses with low margins often pay less under normal income tax.
Do I need VAT as well?
Yes, if your taxable sales reach KES 5 million in a 12-month period, regardless of which income tax route you use.
Related calculators and guides
Not sure which regime fits you?
We compare both on your real figures and register or switch you correctly.
Book a free books checkEstimates for guidance only, not tax advice. Rates were checked in October 2026 and can change. Confirm with KRA or a qualified professional.