A country requires money to run and the responsibility to arrange for that money falls on the Government. There are various ways in which a Government makes money. While fees, fines, bonds, and other similar sources generate some revenue, taxes remain the largest source of revenue. Citizens of Kenya who earn a salary are required to pay Income Taxes and businessmen have to pay corporate taxes after calculating the amount due with a Kenya tax calculator online.
The Income Tax system in Kenya is based on the “Pay as You Earn” or PAYE system of tax calculation. As its name implies, it is the amount that the salaried individuals pay even before they receive their paychecks in hand. The breakdown of their income includes the tax that they have paid from their income already, which they can check by way of a Kenya PAYE calculator. This system has many benefits as you can see below.
1. Prevents Evasion: Tax evasion is disastrous for the economy. The Government needs taxes to run all public services and institutions. Roads, bridges, and other constructions are completed by way of the public revenue where taxes have the biggest share. If a large part of the population does not account for and pay taxes, the whole country would shut down. The PAYE tax system prevents tax evasion as it charges the tax even before an individual receives his or her salary.
2. Accurate Record: The employer deducts the applicable tax from the paycheck of every employee. The tax amount accumulates over the year and then the employer has to submit that tax to the Kenya Revenue Authority (KRA). The whole amount can get checked and audited accurately because the accounting record is clear. Even if there is a mistake, rectification is easy because of the good record through which the tax can be traced back to the individual.
3. Easy for Employees: The PAYE system is beneficial to employees as well. They don’t have to keep a detailed and complex record of their taxes. The employees already have other areas of the job that requires more focus and the burden of accounting for their taxes is not feasible for them. They can, however, keep a track of how much tax they are paying with a KRA PAYE calculator that is available online. Moreover, the employees also don’t have to visit the KRA to pay their taxes.
4. Better Estimates: The Government has to plan for the future and the taxes that they receive in the present help them to devise budgets. The PAYE system is helpful here because the Government has a proper record of how much tax comes in every year. The authorities can make an estimate of an increase or decrease in this revenue based on economic conditions.
Every citizen can share in the job of building the nation by paying taxes on time. A KRA tax calculator helps them to check what their contribution is. When everyone does their bit the whole country advances rapidly to a better future.