Understanding KRA Taxpayer Obligations During e-Registration

When registering for a KRA PIN in Kenya, one of the key steps is selecting your tax obligations. Many new taxpayers get stuck here because they’re unsure which boxes to tick. Selecting the wrong option means KRA will expect tax returns you may not need to file.

Let’s break down each obligation with illustrations to make it simple.

🟢 1. Income Tax Resident

This is the default obligation for Kenyan residents. If you live in Kenya and earn an income (salary, business profits, consultancy, farming, etc.), you must register for this.

Illustration:
Imagine Mary, a teacher in Nairobi. Even though her salary is taxed at source, she still needs a PIN with Income Tax Resident selected.

👉 Registration Date: Usually the date you apply for the PIN.

🔵 2. Income Tax Non-Resident

This applies to foreigners who earn income from Kenya but don’t live here.

Illustration:
Think of John, a Ugandan engineer contracted to a Kenyan firm for 6 months. He’s not a Kenyan tax resident, but he must pay non-resident withholding tax.

👉 You don’t need this if you are a Kenyan citizen.

🟡 3. Income Tax PAYE (for Employers only)

This is for employers who deduct Pay-As-You-Earn (PAYE) from salaries and submit it to KRA every month.

Illustration:
Nestict Infotech, an IT company in Mombasa, has 15 employees. Since they pay salaries, they must register for PAYE to remit taxes on behalf of their staff.

👉 If you are just an employee, don’t select this.

🟠 4. Turnover Tax (TOT)

For small businesses earning KES 1M – 25M annually. Instead of complex tax returns, you just pay 1.5% of your gross sales.

Illustration:
Achieng runs a boutique in Kisumu, earning KES 5 million per year. She registers for TOT since she qualifies as a small business owner.

👉 If you make less than KES 1M per year, you don’t need TOT.

🔴 5. Significant Economic Presence Tax

This applies to non-resident digital service providers earning money in Kenya.

Illustration:
Think of global companies like Netflix or Facebook Ads that earn from Kenyan users. They must register under this tax even though they are not based in Kenya.

👉 Local individuals and businesses don’t need this.

🟣 6. Income Tax – Rental Income

For landlords who earn rental income from property in Kenya.

• Residential Rental Tax: If you earn between KES 288,000 – 15M annually, you pay 7.5% of gross rent (final tax).
• Commercial rentals are taxed under normal business income.

Illustration:
Mr. Otieno owns two apartments in Nairobi, earning KES 1.2M in rent annually. He must register for Rental Income Tax.

👉 If you don’t earn rent, don’t tick this option.

✅ Key Takeaway

When registering for a KRA PIN:

• Ordinary employees → Select Income Tax Resident.
• Business owners → Add Turnover Tax (if between 1M–25M sales).
• Employers → Add PAYE.
• Landlords → Add Rental Income.

⚠️ Only select obligations that apply to you. Otherwise, KRA will expect you to file returns you don’t actually need.

💡 Illustrated Summary: