Statutory Payments in Kenya

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:

• PAYE
• NSSF
• SHIF (Social Health Insurance Fund)
• VAT
• Withholding tax
• Turnover tax

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.

Statutory compliance is an essential part of business financial planning.

Why statutory payments matter

Statutory deductions protect both:

Employees → healthcare, pensions, social security

Businesses → legal compliance

Failing to comply can lead to:

• penalties

• interest charges
• audits
• legal action
• reputational risk

In short: compliance protects your business.

Include NSSF pension obligations in your long-term planning — explore Serrari pension products.

Key statutory deductions for employers

If you employ staff in Kenya, these are the core obligations.

Read the full breakdown in the critical business statutory payments guide for SMBs.

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

• Kenyan residents → taxed on global income
• Non-residents → taxed on Kenyan income only

Current PAYE structure

Graduated rates from 10% to 30% depending on income.

Penalties

• Late filing → 25% of tax or KSh 10,000
• Late payment → 5% + 1% monthly interest

How PAYE is paid

• File via iTax
• Generate payment slip
• Pay via bank or M-Pesa (Paybill 572572)

A Serrari Money Market Fund can help manage the liquidity needed for monthly statutory remittances.

Tax on goods and services

VAT is charged on taxable goods and services supplied in Kenya.

Speak with a Serrari advisor to ensure your business financial structure accounts for all statutory obligations.

Businesses with turnover ≥ KSh 5 million/year

(or voluntary registration)

When VAT is due

When any of these occur:

• goods/services supplied
• invoice issued
• payment received

Penalties

• Late filing → higher of KSh 10,000 or 5%
• Late payment → 5% + 1% monthly interest