Most Kenyan businesses don't know this: KRA is waiving 100% of pre-2026 penalties and interest - until 31 Dec 2026.Check if you qualify →
Kenya Tax Law Library/Income Tax Act
The statute behind PAYE, withholding tax, turnover tax interactions, rental income and the creator-economy taxes our calculators model alongside VAT.
Why this law matters
Businesses meet tax as a system, not one Act at a time: whether you also owe turnover tax, withholding on royalties, or tax on YouTube income is decided here, not in the VAT Act.
Official text: Full text on Kenya Law (kenyalaw.org)
The provisions that matter
What it saysRequires deduction of tax at source on specified payments — including royalties to resident and non-resident content creators and service providers — at rates in the Act's schedules.
What it means for your businessThe 'YouTube 5% tax' and similar creator-economy deductions are withholding mechanics under this Act, not VAT — they coexist with any VAT/GST applied by the platform.
What it saysRental income for resident individuals is taxable under the monthly rental income regime; VAT applies separately to commercial rent where the landlord is VAT-registered.
What it means for your businessLandlords ask 'is rent VAT-able?' — the honest answer is: income tax under this Act always applies; the 16% depends on your VAT registration status and the property's use.
What it saysBusinesses with turnover below the VAT threshold and under KES 25M may fall under turnover tax at 1% (2% above KES 25M... within regime limits), instead of VAT and full income tax mechanics.
What it means for your businessChoosing between turnover tax and voluntary VAT registration is a real optimisation decision for SMEs just under the threshold — our VAT vs turnover tax guide runs the numbers.
Applied guides
Citing this page
VAT services from KES 5,000
WhatsApp us anytime - replies within the hour