4th-Dec-2025 • Martin Mwangi • Tax and Finance
Welcome, Kenyan entrepreneurs! Navigating the financial landscape can seem daunting, especially when running a small or medium-sized enterprise (SME). However, understanding the ins and outs of taxation and finance is essential for your business's growth. Let's dive into some key aspects to help you make informed decisions.
Kenya Revenue Authority (KRA) governs the tax system in Kenya. As a small business owner, it's crucial to know your tax obligations. The most common taxes for SMEs include Value Added Tax (VAT), Pay-As-You-Earn (PAYE), and Corporation Tax.
If your annual turnover exceeds KES 5 million, you're required to register for VAT. The standard rate is 16%, but certain goods and services have reduced or zero-rated rates.
Employers are responsible for withholding PAYE from employees' salaries and remitting it to KRA on their behalf. The rate varies depending on the employee's monthly income.
This is a tax charged on the profit made by your company. The standard corporate tax rate is 30%. However, micro-enterprises with an annual turnover of less than KES 5 million are exempt.
Effective financial management can help you make the most of your resources. Keep accurate records, create a budget, and regularly review your financial statements to identify trends and areas for improvement.
Technology can simplify many aspects of tax and finance management. Platforms like Lipabiz offer integrated business management solutions, including invoicing, expense tracking, and tax compliance tools. These solutions help you save time and reduce errors.