Running a business in Kenya doesn’t just mean paying salaries. It also means handling statutory deductions — the mandatory payments required by law. These include taxes and employee contributions like:
What You'll Learn
What every business must deduct, pay, and stay compliant on
Running a business in Kenya doesn’t just mean paying salaries.
It also means handling statutory deductions — the mandatory payments required by law.
These include taxes and employee contributions like:
They’re called statutory because they’re not optional.
If you employ people or run a registered business, the law requires them.
This guide explains what they are, who pays them, and how to stay compliant.
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Why statutory payments matter
Statutory deductions protect both:
Employees → healthcare, pensions, social security
Businesses → legal compliance
Failing to comply can lead to:
In short: compliance protects your business.
Key statutory deductions for employers
If you employ staff in Kenya, these are the core obligations.
Income tax deducted from salaries
PAYE is income tax withheld from employee salaries and sent to KRA by the employer.
👉 The employer deducts before paying salary.
Who pays PAYE
Current PAYE structure
Graduated rates from 10% to 30% depending on income.
Penalties
How PAYE is paid
Tax on goods and services
VAT is charged on taxable goods and services supplied in Kenya.
Businesses with turnover ≥ KSh 5 million/year
(or voluntary registration)
When VAT is due
When any of these occur:
Penalties
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