KRA PIN Registration for Companies and Partnerships in Kenya: A Comprehensive Guide

Are you planning to start a business in Kenya as a company or a partnership? If so, one of the first essential steps you need to take is registering for a KRA PIN (Personal Identification Number). This PIN is crucial for various activities, including opening a bank account, filing tax returns, and participating in government tenders. In this guide, I will walk you through the process of KRA PIN registration for both companies and partnerships, ensuring that you have all the necessary information to kickstart your business journey in Kenya.

Before we start, however, here is what you need to remember:

1. KRA PIN registration is essential for companies and partnerships in Kenya.
2. The process can be completed online through iTax.
3. Partnerships must file the Income Tax Partnership Return (IT2P) and declare profit-sharing ratios.
4. Partnerships do not pay corporation tax; individual partners are responsible for their taxes.
5. Understanding tax obligations and compliance is crucial for businesses in Kenya's regulatory environment.

Now, let us get started.

Who is KRA?

The Kenya Revenue Authority (KRA) is the government agency responsible for collecting revenue in Kenya. Established under Chapter 469 of the Kenyan laws, KRA has played a pivotal role in revenue collection since July 1, 1995. Its core functions include assessing, collecting, and accounting for all revenues by the written laws and specified provisions. Additionally, KRA advises on matters related to revenue administration and performs other functions as directed by the Minister.

Who Should Register for a KRA PIN?

Companies

Obtaining a KRA PIN is not optional if you plan to establish a company in Kenya. It is a mandatory requirement for various activities, including:

1. Applying for a bank account.
2. Filing monthly returns with KRA.
3. Applying for a Tax Compliance Certificate (TCC).
4. Participating in government tenders.
5. Purchasing land or property under the Company's name.

Partnerships

For partnerships, a KRA PIN is equally essential. Partnerships are formal arrangements between two or more parties to manage and operate a business, sharing its profits and losses. However, a husband and wife cannot register a partnership together. Each partner contributes to all aspects of the Company, and gains and losses are shared according to an agreed-upon formula in the partnership deed.

KRA PIN Registration Requirements

Before you embark on the KRA PIN registration process for your Company or partnership, ensure you have the following documents and information ready:

For Companies

1. Copy of the Certificate of Incorporation for your Company.
2. Memorandum of Association and Articles of Association (optional).
3. KRA PIN of at least one of the Company's directors.
4. Company details, including physical address, email address, and phone number.

For Partnerships

1. Copy of the Acknowledgement receipt.
2. KRA PIN Certificate for one of the partners (must be on iTax).
3. Deed of partnership (optional).
4. Tax Compliance certificate of the partners (optional).

Transactions Requiring a KRA PIN

Once you have obtained your KRA PIN, it becomes necessary for various transactions, including but not limited to:

1. Registration of titles and stamping of instruments.
2. Approval of development plans and payment of water deposits.
3. Registration of motor vehicles, transfer of motor vehicles, and licensing.
4. Registration of business names.
5. Registration of companies.
6. Underwriting of insurance policies.
7. Trade licensing.
8. Importation of goods and customs clearing.
9. Payment of deposits for power connections.
10. Contracts for the supply of goods and services to government ministries and public bodies.
11. Opening accounts with financial institutions and investment banks.
12. Registration and renewal of membership by professional bodies and licensing agencies.
13. Registration of mobile cellular pay bill and till numbers.
14. Conducting business over the internet or electronic networks.

KRA PIN Registration Process

The KRA PIN registration process for companies and partnerships is initiated online through iTax. Here are the steps to follow:

1. Visit the iTax website.
2. Select "New PIN Registration."
3. Fill out the online form with the required details.
4. Upload relevant documents, including business registration certificates, PINs of company directors/partners, and National IDs.
5. Submit the online application.

Completing the Registration Form

Step 1: Taxpayer Type

• Choose "Non-Individual" for company registration.
• Select the online mode for registration.
• Move to the next page.

Step 2: Basic Information

• Select your business type (e.g., Company).
• Pick your business sub-type.
• Enter your business registration certificate number.
• Provide your business commencement date.
• Fill in any additional details as required.

Step 3: Obligation Details

• Enter relevant tax obligations, such as Income Tax Company and VAT (if applicable).
• Provide turnover details (if appropriate).

Step 4: Branch Details (if applicable)

• Enter branch information.

Step 5: Director Associates (for partnerships)

• Enter details of persons associated with the business, including their PINs and profit-sharing ratios.

Step 6: Agent Details (if applicable)

• Provide information about authorized agents for tax submissions.

Step 7: Estate Trust Details (if applicable)

• Enter information related to estates or trusts.

Step 8: Acknowledgment Receipt

• Download the acknowledgement receipt as proof of registration.

Income Tax Partnership Return (IT2P)

Partnerships declare their profits through the Income Tax Partnership Return (IT2P). When filing this return, you must include the PIN of each partner and specify the profit-sharing ratio. Profits and losses are then attributed to each partner's PIN for their annual return filings.

Taxation for Partnerships

Unlike corporate entities, partnerships do not pay corporation tax. Instead, each partner is individually responsible for their taxes. Profits are distributed to individual partners based on their ownership ratio. They are taxed as business income at a graduated scale of 10% to 25%. Partners must file their Individual Income Tax Returns between January 1 and June 30 of the following year.

Additional Tax Laws Relevant to Partnerships

• Partnerships with employees must apply for PAYE and deduct taxes from their employees' salaries or wages, remitting them to KRA before the 9th of the following month.
• Partnerships may voluntarily register for VAT if they deal with taxable goods or services or if their annual turnover exceeds Kshs. 5,000,000.

READ ALSO: How to Calculate Corporate Tax in Kenya

Wrapping-Up

In conclusion, obtaining a KRA PIN is fundamental to establishing your business in Kenya. It ensures that you comply with the law and opens up opportunities for your business to engage in various activities. Remember that tax compliance is an ongoing responsibility, so stay informed and fulfil your obligations as a responsible business owner in Kenya. If you have questions or need assistance with the KRA PIN registration process, please explore the KRA website or consult a tax professional. Your journey to business success begins with proper registration and compliance. Good luck!

FAQs

1. Who is required to register for a KRA PIN in Kenya?

• Anyone who expects to accrue a tax liability under the Income Tax Act or the Value Added Tax Act, 2013.
• Individuals or entities involved in manufacturing, importing excisable goods, supplying excisable services, and more.
• Companies, partnerships, and individuals engaged in various transactions, including registration of titles, stamping of instruments, and trade licensing.

2. What documents are required for KRA PIN registration for companies?

• Certificate of Incorporation for the Company.
• Memorandum of Association and Articles of Association (optional).
• KRA PIN of at least one company director.
• Company details, including physical address, email address, and phone number.

3. Can a husband and wife register a partnership together in Kenya?

• No, husband and wife cannot register a partnership together. Partnerships typically involve two or more parties who share the management and profits of a business. Spouses are considered one party in this context.

4. Do partnerships pay corporation tax in Kenya?

• No, partnerships in Kenya do not pay corporation tax. Instead, partners account for their taxes individually, and profits are distributed to each partner's PIN and taxed as business income at a graduated scale of 10% to 25%.

5. What is the deadline for filing an Income Tax Partnership Return (IT2P) in Kenya?

• Partnerships should file their IT2P returns between January 1 and June 30 of the following year. There is no requirement for audited accounts, as each partner prepares their accounts.

6. Can partnerships voluntarily register for VAT in Kenya?

• Yes, partnerships can voluntarily register for VAT if they deal with the supply of taxable goods or services. However, mandatory registration is required if their annual turnover exceeds Kshs. 5,000,000.

7. How can I obtain a Tax Compliance Certificate (TCC) for my partnership in Kenya?

• Before receiving a TCC for your partnership, ensure all partners are tax-compliant by filing their returns and declaring their income. The individual PINs of partners are also checked before issuing the TCC for the partnership.

8. Can I apply for a KRA PIN for my partnership online?

• Yes, KRA PIN registration for partnerships can be initiated online through iTax. Follow the steps outlined in this guide to complete the registration process efficiently.