The tax charged under business income on Turnover tax has been reduced to 1%. In addition, to qualify for the provisions of turnover tax, the resident person’s turnover from business is more than one million shillings but does not exceed or is not expected to exceed fifty million shillings during any year of income.
A resident person who would otherwise be liable to pay tax under Turnover tax provisions may by notice in writing addressed to the commissioner elect no to be subject to turnover tax. The resident person would be subjected to the other provisions of the income tax act.
Taxpayers should be aware that provisions of Turnover Tax do not apply to the following incomes;
(a) rental income;
(b) management or professional or training fees; or
(c) any income which is subject to a final withholding tax under this Act.
A person subject to turnover tax should submit a return and pay the tax due to the Commissioner on or before the twentieth day of the month following the end of the tax period. “tax period” means a calendar month.
A person subject to turnover tax is required to keep records necessary for the determination and ascertainment of the tax in accordance with the Tax Procedures Act, 2015
The provisions come into operation from the date of assent.