Turnover Tax (TOT) in Kenya is a 1.5% tax on the gross sales of resident businesses with an annual turnover between KES 1,000,000 and KES 25,000,000. It is a final tax designed for small businesses to simplify compliance, payable monthly by the 20th of the following month via iTax.
Eligibility for Turnover Tax
Any resident person or corporate whose gross / expected turnover is more than Kshs. 1,000,000 but does not exceed or expected to exceed Kshs. 25,000,000 in any year of income is eligible for Turnover Tax.
This tax is typically calculated as a percentage of the total transaction value when securities, such as stocks and bonds, are bought or sold. The purpose of this tax is to generate revenue for the government and regulate trading activities in the financial markets.
The tax under section 44AD of the Income Tax Act is calculated at 8% of the total gross turnover (or 6% for digital transactions) provided that the annual turnover is below Rs. 2 crores (Rs. 3 crores if 95% of receipts are through online modes).
The government levies taxes on all goods and services that are provided. This is referred to as turnover tax (also known as VAT or, in Dutch, BTW). At the moment, the highest rate is 21% and the lowest 9%.
Sometimes a client pays an invoice only partially or not at all. In that case, the entrepreneur has paid too much turnover tax, because the tax was calculated on an amount that was never fully received. The law allows these excess payments to be reclaimed.
Businesses must register for VAT if their taxable turnover exceeds £90,000 in a rolling 12-month period or is expected to exceed this threshold in the next 30 days. Zero-rated goods and services are included in taxable turnover calculations, even though VAT is charged at 0%.
Turnover tax is reserved for micro businesses with a “qualifying turnover” of less than R 1 million for the financial year. “Qualifying turnover” is the total amount received by a business for the year of assessment from carrying on business activities.
Turnover is the total amount of money a business generates from its operations. Profit, on the other hand, is what remains after deducting all expenses from the total revenue. It reflects the company's ability to sell its products or services and generate income.
In many countries, companies must report tax transactions on a monthly, quarterly, or annual basis. Turnover reporting is based on transaction dates or accounting dates, rather than tax point dates. It doesn't report manual tax transactions entered into the tax repository.
One of the disadvantages of turnover tax is that a business operating at a loss will still have to pay turnover tax (Visser, 2009). Under the income tax system, no tax is payable when businesses are operating at a loss. The assessed loss can then also be utilised against the first profits of the business.
To calculate turnover (employee churn), you divide the number of employees who left during a period by the average number of employees in that same period, then multiply by 100 for a percentage, using the formula: (Leavers / Average Employees) x 100, where average employees are (Start Count + End Count) / 2.
Almost all countries levy a general turnover tax, i.e. a tax on essentially all goods and services supplied by manufacturers, traders and service providers. Those turnover taxes are mostly levied under a VAT type of tax system and, in a decreasing number of cases, as a multi or single-stage (retail) sales tax.
The turnover of a business should be easy to determine with accurate records: find the total sales amount for a given period. To determine the VAT taxable turnover, you would then need to subtract any amounts that can be excluded (aren't subject to VAT).
What is the Turnover Limit for Income Tax Audit? A taxpayer must get a tax audit done if their business's sales, turnover, or gross receipts are over ₹1 crore, or if their profession's earnings exceed ₹50 lakh in a financial year.
A turnover tax is similar to VAT, with the difference that it taxes intermediate and possibly capital goods. It is an indirect tax, typically on an ad valorem basis, applicable to a production process or stage. For example, when manufacturing activity is completed, a tax may be charged on some companies.
A 20% turnover means 20% of something has been replaced or sold within a period, commonly referring to employee turnover (20% of staff left) or portfolio turnover (20% of investment assets traded), both indicating the rate of change, with high rates often signaling issues like poor culture or active (potentially costly) trading, though low turnover in investments often suggests a buy-and-hold strategy.
Turnover refers to the total amount of income a business generates from its core activities over a given period, before deducting any costs or expenses (e.g., stock, wages, utilities, taxes). Essentially, it's the gross revenue your business brings in.
Also known as income or gross revenue, turnover is the total amount of sales you make over a set period. This could be weekly, monthly, quarterly or annual turnover - whatever time period you choose to measure.
Corporate Income Tax is calculated on your net income, which means you subtract your expenses first. Turnover Tax is based on your total sales, without subtracting any expenses.
Yes. If you're a sole trader who is either already VAT-registered or will exceed the VAT threshold, you'll need to charge VAT on your labour time in addition to the cost of goods. Labour is part of your service and therefore, VAT should be calculated and added to it as part of your invoice.
Put simply, turnover is the total amount of money your business receives from the sale of goods and services – minus discounts and VAT. Turnover is calculated over a specific period of time, usually a quarter or financial year.
Many businesses prefer to buy their inputs from businesses in the VAT system so they can claim credits on the tax they pay. As a result, countries allow small businesses to register for the VAT even if they are not required to do so.