How To Pay Tax Using Mpesa - www.taxkenya.com

Mpesa is one of the mobile money systems used in the country. This post is about How To Pay Tax Using Mpesa. Paying tax using mobile money is one of the recommended payment methods in Kenya.

Taxpayers are expected to make tax payments to KRA when the tax is due. Failure to make the tax payments results in extra tax payments in the form of tax penalties and interest.

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There are taxpayers who do not know that they can pay tax using Mpesa. The tax law allows taxpayers to make tax payments in advance before the due date. To do this, the taxpayers can use Mpesa to make the payments.

Tax Payment Choices

In Kenya, there are various tax payment methods. However, taxpayers have two main choices of making the tax payments:

a. Through KRA partner banks

KRA has appointed some banks in Kenya to collect tax on its behalf. This is where the taxpayer will either deposit cash, cheque or a bank transfer for tax to KRA’s bank accounts with Central Bank. The banks recive the tax money and remit to KRA bank accounts.

As of the date of this post, the following are the listed partner banks:

a. Bank of Africa,

b. MAY FAIR,

c. Bank of India,

d. Chase,

e. Equity,

f. I&M,

g. SIDIAN,

h. ABSA,

i. CBKEN,

j. Eco Bank,

k. Transnational,

l. Standard Chartered,

m. UBA,

n. CBA

o. KCB.

These are not the only banks. The current list of banks is listed in the tax payslips.

Other partner banks are NBK, SBN, Habib AG Zurich, Post Bank, Stanbic, GT Bank, Oriental Commercial, Bank of Baroda, DTD, Citibank, ABC, Consolidated, Co-op Bank, Credit, Family, First Community, Gulf African, Guardian.

When paying through the appointed banks, there is no limited amount of money to pay as tax. One can pay any amount of money they have to pay as tax. However, Mpesa payments are restricted to kshs 70,000 per payment as at the time of this post.

Pay Tax Using Mpesa

b. M-payment using Mpesa

M-payment its the other method of paying tax in Kenya. To pay tax using Mpesa, one must have access to the Mpesa account. The current amount of tax money that one can make payment is limited to kshs. 70,000. Therefore, a taxpayer can only make a tax payment using Mpesa of less than kshs 70,000.

However, to use Mpesa to make a higher amount, the tax payments must be split. For example, if taxpayer A has a tax payment amount of kshs 100,000, taxpayer A can split the amount into two: kshs 70,000 and kshs 30,000 and generate payment slips for each amount.

It is important to note that A cannot generate one payment slip for the total kshs 100,000 to make the two payments. For each amount, there is a need for a payment slip.

Mpesa process

This post is about making tax payments using Mpesa. Before making Mpesa payments, there are two critical items that a taxpayer should have;

Adequate money in the Mpesa account to make the tax payment and Mpesa charges.
I-Tax generated payslip. This can either be self-generated or generated by KRA for the taxpayer, where the taxpayer cannot generate one.

Steps

The steps to follow are indicated in the payment slip. However, for the sake of those persons who may not have generated a tax payment slip and would want to know the process, the following are the steps.

1. Go to Mpesa.

2. Select Lipa na Mpesa.

3. Select Pay bill.

4. Select Enter Business no.: current KRA Lipa na Mpesa Pay bill 572572

5. Select enter Account no. the account number is in the payslip (2020………) and press ok.

6. Enter the amount and press ok.

7. Enter your Mpesa PIN and press ok.

8. You will get a confirmation notification from Mpesa about transferring the money to KRA for the account (payment slip number). The notification will give Mpesa payment number, date, and time.

9. You will get a confirmation notification from KRA of receipt of the tax money.

10. i- Tax will send a notification of the crediting of the tax amount into your tax ledger.

Payment slip number

Note that the payment slip number is normally referred to as the payment receipt number (PRN). Currently, it is 16 digits. This number is at the top right-hand corner of the payslip that you generate from i-Tax.

The payslip can be generated to either make:

A tax payment where a tax return has been filed.
A tax payment where no tax return has been filed.

Advantages of using Mpesa for tax payments

There are many advantages of using Mpesa to make your tax payment.

1.You do not have to go to the bank.

2. You can make the payment any day as long as it is before the end of the due date; for example, for VAT, the due date is by the end of the following month’s 20th day.

That day can be a Saturday, a Sunday, or a holiday. Payment can be made these days, unlike the case where payment is made through banks that would ordinarily be closed.

3. Tax payment can be made at any time of the day, including night time.

4. A taxpayer can make tax payments on the go, meaning that the taxpayer does not have to wait for specific times to make tax payments. They can make the payments as long as they have the money to pay, which is advantageous for tax planning.

5. There will be evidence of the tax payment in the taxpayer’s Mpesa statement, where the taxpayer has opted to receive the Mpesa statements.

Questions: