Filing PAYE (Pay As You Earn) returns is a monthly statutory requirement for all employers in Kenya. If done accurately and on time, it keeps your business compliant with the Kenya Revenue Authority (KRA) and helps avoid costly penalties. This guide outlines the essential steps and tools needed to file PAYE returns effectively.
Understanding Your PAYE Obligations
As per the Finance Act No. 4 of 2023 (effective July 1, 2023), PAYE is deducted from employee salaries using the following graduated tax bands:
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10% on the first KSh 288,000 per year
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25% on the next KSh 100,000
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30% on the next KSh 5,612,000
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32.5% on the next KSh 3,600,000
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35% on income above KSh 9,600,000
Employers must file and pay PAYE by the 9th day of the following month. For example, April deductions must be filed and paid by May 9th. Late filing attracts a 5% penalty (minimum KSh 2,000) and a 1% monthly interest on the unpaid amount.
Preparing Your Payroll Data
Before logging into iTax, gather the following:
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P9 forms for each employee
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Employee details: Full names, KRA PINs, gross pay, benefits, and reliefs
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The official P10 Excel Template (contains P10A and P10B sheets)
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Ensure macros are enabled in Excel to validate and generate the ZIP file
Step-by-Step PAYE Filing Process on iTax
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Log in to iTax at https://itax.kra.go.ke using your Employer KRA PIN and password
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Navigate to "Returns" > "File Return" and select "Income Tax – PAYE (P10)"
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Download and fill the Excel P10 template with required data
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Validate the file using the built-in macro and generate a ZIP file
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Upload the ZIP file on iTax and submit
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Generate a Payment Registration Number (PRN)
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Pay using M-PESA (Paybill 222222), bank, or card
Tips and Tools for Smooth PAYE Filing
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Use the KRA PAYE calculator to verify figures before submission
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Integrate your payroll software with the iTax P10 format for easy import
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Do monthly payroll reconciliations before the 5th of each month
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File amended returns quickly if you discover errors
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Keep digital backups of all returns, slips, and acknowledgements
Avoid Penalties, Stay Compliant
To avoid penalties, always file before the 9th and keep good records. Ensure your PAYE obligation is correctly listed on your iTax profile under your employer PIN.
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