“Why am I paying so much in taxes?”

A client once asked me this, genuinely worried.

She was paying Turnover Tax (TOT), but couldn't understand why the tax felt so heavy.

Then we looked at the numbers.

She knew it was “Turnover Tax.”

But she hadn't really understood what that meant.

TOT is based on sales, not profit.

You can sell KSh 1M, spend KSh 900K running the business, and still be taxed based on the KSh 1M turnover.

That's why growing sales don't always mean growing profits.

Sales ↑ Costs ↑ Margins ↓ TOT still applies to turnover.

TOT isn't necessarily a bad tax regime.

But don't just ask:

“How much are we selling?”

Ask:

“How much are we actually keeping?”

Understand your margins before celebrating the turnover.