6 days ago
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The Kenya Revenue Authority (KRA) has unveiled caller involvement rates that volition beryllium utilized to cipher taxation connected worker and institution loans for the 2nd fractional of 2025.
In a nationalist announcement dated 8th July 2025, KRA stated that the alteration volition beryllium applicable successful the adjacent 3 months from July 2025.
“Please instrumentality enactment of the updates for cardinal taxation provisions on: Fringe Benefit Tax, Deemed Interest Rate and Low Interest Benefit for the months of July, August and September 2025,” work the announcement successful part.
KRA has announced that the marketplace involvement complaint for Fringe Benefit Tax (FBT) volition beryllium 8% for the months of July, August, and September 2025.
KRA Lowers Rates connected Fringe Benefits Tax
Fringe Benefit Tax is payable by the leader connected immoderate indebtedness provided to an employee, director, oregon their relatives astatine an involvement complaint little than the marketplace rate.
The taxable worth is the quality betwixt the marketplace involvement complaint and the existent involvement paid connected the loan.
It besides covers non-cash benefits offered by an leader to an employee, specified arsenic the usage of vehicles, housing, oregon different perks that are not portion of the employee’s gross salary.
If the word of the indebtedness continues beyond the employee’s day of termination, the taxation continues to use arsenic agelong arsenic the indebtedness remains unpaid.
Employers are required to remit the fringe benefits taxation by the ninth time of the pursuing month, with the taxable worth determined quarterly based connected marketplace lending rates prescribed by the KRA.
Also Read: KRA Issues Way Forward connected Eldoret Congestion After Traders’ Outcry
Deemed Interest Rate for Next 3 Months
KRA besides announced an 8% deemed involvement complaint nether Section 16 of the Income Tax Act.
This applies to the involvement complaint utilized to cipher taxable income erstwhile a indebtedness is fixed astatine small oregon nary interest, particularly successful transactions betwixt related parties, specified arsenic genitor companies and subsidiaries oregon betwixt companies and shareholders.
If nary involvement (or precise debased interest) is charged connected specified a loan, KRA assumes a “deemed” interest—in this case, 8%—to cipher the payment arising from the loan.
”For purposes of conception 16(2)(a) of the Income Tax Act, the prescribed complaint of involvement is 8 per cent. This complaint is applicable for the months of July, August, and September 2025, connected the deemed involvement rate,” work portion of the connection by KRA.
Also Read: KRA Announces Changes Affecting All Importers and Exporters
Low Interest Benefit Rate
For the Low Interest Benefit, which applies to loans fixed to employees by employers astatine debased interest, KRA acceptable the prescribed complaint astatine 9%.
This complaint volition beryllium utilized from July to December 2025 to find the taxable benefit.
Withholding taxation astatine the complaint of 15% connected the deemed involvement shall beryllium deducted and paid to the Commissioner wrong 5 moving days.
”For purposes of conception 5(2A) of the Income Tax Act, the prescribed complaint of involvement is 9 per cent. This complaint is applicable for the months of July, August, September, October, November, and December 2025. Withholding taxation astatine the complaint of 15 per cent connected the deemed involvement shall beryllium deducted and paid to the Commissioner wrong 5 moving days,” KRA added.
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Photo of KRA Commissioner General , Humphrey Wattanga. PHOTO/Parliament
