Withholding Income Tax


Withholding Income Tax is tax withheld at source. A person making certain payments deducts tax, at the applicable rate, and remits the tax to the Commissioner on behalf of the recipient. Examples of payments subject to withholding tax include, among others: –

  1. Management, professional or training fees
  2. Consultancy fees, Legal fees, Audit fees
  3. Contractual fees
  4. Winnings
  5. Appearance at or performance to entertain
  6. Royalties
  7. Interest and deemed interest
  8. Dividends


    The person making the payment deducts tax prior to paying the amount due. The tax withheld/deducted is then remitted to the KRA. The payer is required to generate a withholding tax certificate on iTax which is automatically sent to the payee once the payer remits the withholding tax to KRA. Withholding tax deducted should be remitted to KRA by the 20th day of the month following the month in which the tax was deducted.

    Withholding tax is claimable by the payee when filing their annual tax returns and is not an additional tax


    Where a payer fails to withhold tax, the tax shall be deemed to be due and payable by him as though he was the person who earned the income and the due date for the payment shall be the date on which the amount of tax should have been remitted to KRA.

    A late payment penalty of 5% shall also apply on the tax due together with a late payment interest of 1% per month for the period that the tax remains unpaid.


    There are a few instances where withholding tax is a final tax.

    Withholding tax is final when deducted in relation to a payment made to a non-resident person with no permanent establishment in Kenya

    With regard to payments to resident persons, withholding tax is a final tax when it relates to winnings, qualifying interest, qualifying dividend and pensions.

    In every other case, withholding tax is not a final tax. The taxpayer (payee) is required to declare their income(s) and the withholding tax details when filing their annual tax returns and to pay any balance of tax due.


    Employees are subject to PAYE taxes. The rates applicable are the individual tax (graduated scale) rates and the employer may take into account allowable deductions (such as mortgage interest) and reliefs (such as personal relief and insurance relief) when computing the PAYE.

    The rates that are currently applicable for payments to residents and nonresidents are as indicated in the table below: –

    Payments Resident WHT rate (%) Non-resident WHT rate (%)*
    Dividend** 10 15***
    Qualifying dividend 5 N.A
    Interest on Bearer instruments of at least 2 years 25 25
    Interest on Government bearer bonds with maturity ≥ 2 years 15 15
    Interest on bearer bonds with maturity ≥ 10 years 10 25
    Interest paid by SEZ to non-resident   5
    Fees payable to insurance brokers 5  
    Qualifying interest on housing bonds 10  
    Qualifying interest on other bearer instruments 20
    Qualifying interest-other 15 N/A
    Royalty, natural resource income 5 20
    Royalties paid by SEZ to non-resident   5
    Winnings from gaming and betting 20 20
    Management fees, professional fees, training fees 5 20****
    Contractual fees 3 20
    Management Fees paid by SEZ to non-resident   5
    Rent/leasing of Immovable property 10 30
    Rent/leasing of property other than immovable property N/A 15
    Pension/retirement annuity Graduated scale 5
    Sales promotion, marketing, advertising services, and transportation of goods (excluding air and shipping transport services)  N/A 20
    Insurance or reinsurance premiums  N/A 5
    Payments to sportsmen and entertainers 5 20
    Supporting, assisting or arranging an appearance or performance N/A 20
    Gains from business of non-resident ship-owner  taxed under Section 9(1) of Income Tax Act   2.5
    Gains & Profits from the business of transmitting  messages chargeable under Section 9(2) of Income Tax Act   5

    * The rates of WHT applicable for non-residents may vary if the payee is a resident of a country which has a double tax agreement with Kenya that provides a different rate.

    **Dividend paid to a resident corporate shareholder with more than 12.5% voting power is exempt from withholding tax

    *** Rate applicable to citizens of the East African Community Partner States in respect of dividends shall be 5%

    ****Rate applicable on payment in respect of consultancy fees to citizens of the East Africa Community Partner states shall be 15%.

    2021. retrieved From:  https://www.kra.go.ke/en/helping-tax-payers/faqs/withholding-income-tax

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