4. At what rate is Turnover Tax calculated?
Following the Income Tax (Amendment) No. 45 of 2016, Turnover Tax is to be calculated as stipulated in the table below:
Table 5: Turnover Tax Computation
|Monthly Turnover Category|| Tax Payable|
|K0 − K 4,200 ||3% of monthly turnover above K3,000|
|K4,200.01 − K8,300 ||K225 per month + 3% of monthly turnover above K4,200|
|K8,300.01 − K 12,500 || K400 per month + 3% of monthly turnover above K8,300|
|K12,500.01 − K16,500 || K575 per month + 3% of monthly turnover above K12,500|
|K16,500.01− K20,800 || K800 per month + 3% of monthly turnover above K16,500|
|Above K20,800 ||K1,025 per month + 3% of monthly turnover above K20,800|
There are two examples given below for further understanding:
Example 1: Computation of Tax on Turnover of K6,000.
AZ limited carries on business as a retailer. In the month of February 2018 the business made the following sales:
- Cash sales K4,000
- Credit sales K2,000
Total sales K6,000
The sales amount of K6, 000 will fall under the turnover category of K4, 200.01 â K8, 300. Tax payable will be calculated as follows:
Fixed presumptive amount K225
3% on K1, 800 (K6, 000 − K4, 200) K 54
Total tax payable by 14th March 2018 K 279
Example 2: Computation of Tax on Turnover of K4, 000.
AZ limited carries on business as a retailer. In the month of March 2018 the business made the following sales;
- Cash sales K2,500
- Credit sales K1,500
Total sales K4,000
The sales amount of K4, 000 will fall under the turnover category of K0.00 â K4,200. Tax payable will be calculated as follows;
Fixed presumptive amount K 0.00
3% on K1, 000 (K4,000 − K3,000) K 30.00
Total tax payable by 14th April 2018 K 30.00
The exempt amount of K3, 000.00 will only be applicable to turnover that falls within the first category.
5. How is Turnover Tax calculated?
Turnover Tax is calculated on gross sales/turnover.
6. Are there any returns to be submitted for Turnover Tax?
Yes. Turnover Tax Remittance Cards are to be submitted by the 14th of the month following the month in which the transactions occurred.
- − Manually by the 5th of the following month to which the return relates and
- − Electronically by the 14th of the month following the month in which the transactions occurred.
7. When should payment for Turnover Tax be?
Remittance for Turnover Tax is due by the 14th of the month following the month in which the sales are made.
8. For how long are taxpayers expected to keep business records?
Taxpayers will be required to keep all business records pertaining to turnover for a period of up to 6 years. They are also encouraged to keep other business records for purposes of determining their tax liabilities in case they exceed the turnover threshold of K800,000.00.
9. Does a taxpayer who is under Turnover Tax have to submit provisional tax returns?
No. Provisional tax returns are only required for taxpayers whose gross sales/turnover is above K800,000.00
REGISTRATION AND OTHER PROCEDURES
Taxpayers will be required to notify the Commissioner General within 30 days of commencement of business. They will be registered and given a Taxpayer Identification Number (TPIN), Individual or Company Income Tax account number and a Pay As You Earn (PAYE) number where applicable.
A new taxpayer will be required to register as stated above and they will use their estimated turnover on the registration. It will be necessary to register for all eligible tax types at initial registration. Note that all tax matters starting from registration can be done online.
Cessation of business
If a taxpayer closes down his business for whatever reasons, such as business failure, bankruptcy, winding up, etc., they are advised to send a notification to the Commissioner General immediately after such cessation.
Change in Annual Turnover
Where a taxpayer whose turnover is below the threshold discovers that his annual turnover will exceed K800, 000.00 during the course of the year, he will notify the Commissioner General immediately. However, he shall continue to pay Turnover Tax till the end of that particular charge year and shall be assessed under the Income Tax System.
Any change from Turnover Tax to Income Tax and vice versa shall take effect only at the beginning of a charge year. No change will be effected during the course of the charge year.
The changeover can either be initiated by the Taxpayer or indeed by ZRA where the system detects the change in turnover.