Discover everything about Advance Tax in Kenya – who it applies to, current KRA advance tax rates for commercial and PSV vehicles, whether it’s a final tax, and how to declare it in your annual tax return. Ideal for transport operators and fleet owners.
What is Advance Tax in Kenya?
Advance Tax is a form of income tax paid upfront before a commercial or public service vehicle (PSV) is issued with a license. This tax is administered by the Kenya Revenue Authority (KRA) and is applicable to both private and commercial vehicle owners engaging in income-generating transport activities.
Advance tax must be paid annually and is typically calculated based on the vehicle’s load or passenger capacity.
Who is Required to Pay Advance Tax?
Advance tax in Kenya is mandatory for:
- Owners of public service vehicles (PSVs) – e.g., buses, matatus, taxis, tour vans
- Commercial vehicle owners – e.g., trucks, pickups, lorries, trailers, and vans used for business or logistics
KRA Advance Tax Rates in Kenya (2025)
The advance tax rates are categorized based on vehicle type and use:
1. For Commercial Vehicles:
(Vans, Pick-ups, Trucks, Lorries, Prime Movers, Trailers)
Ksh 1,500 per ton of load capacity
Minimum of Ksh 2,400 per year
2. For PSVs / Passenger Vehicles:
(Saloons, Station Wagons, Mini Buses, Buses, Coaches)
Ksh 60 per passenger capacity per month
Minimum of Ksh 2,400 per year
Examples:
A 10-ton lorry = 10 x 1,500 = Ksh 15,000 per year
A 14-seater matatu = 14 x 60 x 12 = Ksh 10,080 per year.
Is Advance Tax a Final Tax?
No, advance tax is NOT a final tax.
Although it is paid upfront before licensing, you are still required to declare this tax in your annual income tax return. If your business income exceeds the advance tax paid, you’ll need to pay the balance.
This ensures that vehicle owners report their true taxable income and pay additional tax where applicable.
Key Takeaways on Advance Tax in Kenya
✅ Advance Tax is mandatory for all income-generating commercial and public service vehicles.
✅ It is paid before licensing and is based on tonnage or passenger capacity.
✅ The minimum payment is Ksh 2,400 per year.
✅ It is not a final tax – you must file it in your income tax return.
✅ Payments are made via the KRA iTax system.
Need help calculating or paying your Advance Tax in Kenya?
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