Paying Kenyan instalment tax on time
When a Kenyan company pays instalment tax, the two ways to work out each instalment, and how to pay with a PRN and record it for a second check.
By Achekam · · 5 min read · For Running a business businesses in Kenya
Many owners of young Kenyan companies meet instalment tax by surprise. The first year's corporation tax return goes in, the tax is paid, and then someone points out that the next year's tax should already have been paid in part, in advance, on dates that came and went months ago.
Instalment tax is corporation tax paid during the year rather than after it. The amounts are not optional extras: they are the same tax, collected earlier. Paying them on time keeps the year-end bill small and keeps the company out of trouble with KRA.
This article covers the four due dates, the two ways to calculate what to pay, the change for some individuals from July 2026, and how to pay and record each instalment.
Four dates in the company's own year
Kenyan instalment tax is due on the 20th day of the 4th, 6th, 9th and 12th months of the year. The months are counted from the start of your company's own financial year, not from January and not from the government's July year.
A worked example in words:
- A company whose year starts on 1 January pays on 20 April, 20 June, 20 September and 20 December.
- A company whose year starts on 1 July pays on 20 October, 20 December, 20 March and 20 June.
The final instalment falls inside the year itself, before the accounts are even closed. That is the point: by the year end, most of the tax should already be with KRA. The balance, if any, is settled with the annual return, which for a Kenyan company is due within 6 months after the year end.
Working out each instalment
The amount is based on the lower of two figures:
- The prior-year method: 110% of the previous year's tax.
- The current-year method: the tax on your estimate of this year's profit.
At the time of writing, resident companies and non-resident companies with a permanent establishment pay corporation tax at 30%, so the current-year figure is the tax at that rate on your estimated taxable profit.
Which method gives the lower answer depends on how the year is going:
- Profits growing fast. Last year's tax uplifted to 110% may still be well below this year's real tax. The prior-year method is lower, and the larger balance falls due with the return.
- Profits falling. An honest estimate of this year's profit may produce less tax than last year's figure uplifted. The current-year method is lower, but it is only as good as the estimate.
- A first year with no prior tax. There is no previous year to uplift, so the estimate is all you have.
KRA's instalment tax page explains who pays instalment tax, both estimating methods and the four due dates. Read it with your accountant before the first instalment of the year, and agree which method you will use and why.
Who is exempt from 1 July 2026
From 1 July 2026, individuals whose only income is employment income are exempt from instalment tax. That change is about people, not companies. A director who draws only a salary does not pay instalment tax personally on that salary, but the company itself still pays its instalments. A director who also earns rent, consulting fees or other business income should check their own position separately.
Paying with a PRN
Each instalment is paid like any other Kenyan tax. Generate a payment slip on iTax for the instalment and note its Payment Registration Number. Pay at a bank, or by M-Pesa to government paybill 222222 with the PRN as the account number. Paybill 572572 is discontinued, so remove it from any old instructions.
Mobile money has been limited to KES 250,000 per PRN since November 2023. Check KRA's current guidance before relying on that limit; a large instalment may need to go through the bank.
Recording each instalment in Achekam
Achekam records a Kenyan tax payment with KRA's own reference and receipt: the PRN and the bank receipt or M-Pesa confirmation. It never generates a payment reference of its own, and it refuses a payment recorded against paybill 572572. A second person must confirm each recorded payment, which means someone other than the payer checks the PRN, the amount and the receipt against each other.
Once its Kenyan rules are approved, Achekam computes corporation tax and instalment tax among the Kenyan taxes it handles. Every Kenyan tax figure in Achekam's rule book was seeded "under review", and Achekam computes nothing from a figure until an Achekam platform administrator approves it. In the same spirit, Achekam's filing calendar leaves out any deadline whose rule is awaiting approval or contested, and says why. If an instalment date is missing from your calendar, that is the reason, and the date above still applies.
Reviewing the estimate mid-year
If you use the current-year method, the estimate deserves a second look. A sensible rhythm:
- Before the 4th-month instalment: estimate the year's profit from the budget and the first quarter's management accounts.
- Before the 6th-month instalment: compare the half-year results with the budget and revise the estimate if the gap is material.
- Before the 9th-month instalment: revise again with three quarters of actual figures.
- Before the 12th-month instalment: your figures are nearly final, so the last instalment should bring the total close to the year's real tax.
Keep each estimate, with the management accounts it came from, on file with the payment. If KRA ever asks how an instalment was worked out, the paper trail answers for you.
Your next step
Write your company's four instalment dates into the finance calendar today, counted from your own year start. Then read Kenyan tax years for companies, staff and government to see how instalments sit beside the other years you deal with, and the month-by-month Kenyan tax calendar for everything else due along the way. If Achekam will not compute a year that began before 2026, Kenyan tax periods before 2026 explains why.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
