What is a turnover tax?

A turnover tax is tax imposed or levied on gross sale of a business in a given period, usually a year i.e. it is levied on transaction that are said to have taken place in a year.

Example in Kenya; Turnover Tax (TOT) is a tax charged on gross sales of a business as per Sec.12 (c) of the Income Tax Act. The tax is payable by resident persons whose gross turnover is more than Ksh 1,000,000 but less than Ksh 50,000,000 in any given year.