Commission for gym and spa staff under Kenyan PAYE
Why KRA taxes commission paid to employed trainers and therapists through PAYE, and how it goes into the monthly pay run, the return and the payment.
By Achekam · · 5 min read · For Fitness businesses in Kenya
Commission keeps a gym's sales floor and a spa's treatment rooms busy. A personal trainer earns a share of every training package they sell, a therapist earns a percentage on products and treatments, and the front desk earns something for each membership signed. It works well for motivation. It also means pay changes every month, and that causes confusion when the payroll is done.
Owners of Kenyan fitness and wellness businesses often ask whether commission is "outside" the salary for tax purposes, or whether it can be paid separately in cash at the end of the month. For employees, the Kenya Revenue Authority's answer is clear, and getting it wrong is expensive.
Commission is employment income
KRA states that taxable employment income includes all cash payments however described, such as wages, bonuses, commissions, leave pay and director's fees, together with the value of non-cash benefits above KShs 5,000 a month. KRA sets this out on its Pay As You Earn page, along with the bands, deadlines and penalties discussed below.
"However described" is the important phrase. Calling the payment an incentive, a sales bonus, a spiff or a top-up does not change it. If the person is your employee and the money is paid because of their work, it belongs in the payroll with their salary, and PAYE is worked out on the total.
Paying commission in cash outside the payroll does not make it tax-free. It only means PAYE was not deducted when it should have been, and the business carries the problem.
Capture commission before the pay run
The practical discipline is to fix each month's commission figure before the payroll is processed, not after.
- Agree the commission rules in writing: what earns commission, at what rate, and when a sale counts (when the client signs, or when they pay).
- Close the month's sales report on a set day, so commission is calculated on a complete period.
- Have a manager approve the list of commission per person, with the sales behind it.
- Enter the approved amounts into the pay run as variable inputs.
In Achekam, pay runs can be monthly, fortnightly or weekly, and each period's overtime, commission, allowances, reimbursements and unpaid leave are entered as variable inputs. The commission then sits on the payslip as its own line, and PAYE is calculated on the full month's pay.
How the monthly bands treat a busy month
KRA says that under the Finance Act 2023, effective 1 July 2023, employers compute PAYE using monthly bands. At the time of writing those bands are 10% on the first KShs 24,000, 25% on the next KShs 8,333, 30% on the next KShs 467,667, 32.5% on the next KShs 300,000 and 35% on all income above KShs 800,000. Check KRA's page before relying on them, because they change with Finance Acts.
Because the bands apply to each month's pay, commission is taxed in the month it is paid. A worked example in words: a trainer's basic salary uses up the lower bands. In a quiet month, with little commission, most of the pay is taxed at the rates of those lower bands. In January, when new members buy training packages, the commission lifts the month's pay, and that extra amount is taxed at the rate of the band it falls into, which may be a higher one. Staff often notice that a large commission month seems "taxed more". Explaining the bands before it happens saves a difficult conversation at the front desk.
Kenyan payroll in Achekam calculates PAYE with personal and insurance relief, NSSF Tier I and II, SHIF, the Affordable Housing Levy and the NITA levy, so the deductions on the commission month are worked out alongside the salary.
The return, the payment and who does what
KRA states that employers must pay the PAYE deducted from employees on or before the 9th day of the following month and file the PAYE return through iTax by the same date, filing a nil return when there is no PAYE to declare.
Here is how the work divides between Achekam and your team:
| Step | Who does it |
|---|---|
| Pay run with commission, approved | Your payroll person and approver |
| Payslips to each employee | Achekam produces them as PDFs with your logo; they can be downloaded or e-mailed one per person, and a setting sends them automatically when a run is approved, with a delivery log |
| P10, SHIF, NSSF and NITA schedules | Achekam prepares them from approved runs, with a P9A per employee for the year |
| Filing the return on iTax | A person, who records the reference iTax gives in Achekam |
| Paying KRA | A person; a second person confirms each payment |
Achekam does not file or pay Kenyan payroll returns. A schedule is finalised by someone other than the person who prepared it, which is a useful check in a small business where one manager often does everything. E-mailing payslips needs an e-mail service set up on the server.
What lateness costs
KRA states that filing a PAYE return late attracts a penalty of the higher of 25% of the tax due or KShs 10,000, and that paying late attracts a penalty of 5% of the tax due plus interest of 1% a month, or part of a month, until the tax is paid in full.
The filing penalty bites even in a month where very little tax is due, because of the minimum amount. For a small studio, it can easily exceed the tax itself. Put the 9th in the calendar of whoever files, with a reminder a few days before.
Trainers who invoice you are a different case
Some gyms work with freelance trainers who run their own clients, invoice the gym, and are paid a fee rather than a salary. Whether such a trainer is genuinely an independent contractor or in substance an employee depends on the working arrangement, not on what the contract is called. Questions such as who sets their hours, whose clients they train and whether they can work for other gyms all matter.
Payments to a true contractor do not go through the PAYE payroll. They follow KRA's rules for payments to businesses, which your tax adviser can confirm. If you are unsure which side of the line a trainer falls on, get advice before the first payment, not after a KRA review.
The month-end routine
Fix a commission cut-off date, approve the list before the run, and treat the 9th as a hard deadline for both the return and the payment. For trainers paid by the class rather than by sales, see paying instructors per class, and for the return itself, the monthly P10 PAYE return.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
