In this post, we will discuss on how to file and pay for withholding taxes in Kenya. What it is, to whom its applies, how to file for withholding tax, the applicable withholding tax rates, and finally how to pay for withholding tax.
What is Withholding Tax
Withholding tax is income withheld by a person making payment and remitted to the taxman. The payer, rather than the recipient, pay it as tax to taxman.
An example is when marketing companies pay commissions to their marketers, the company will withhold some of the commissions and pay to Kenya Revenue Authority as tax on behalf of the marketers.
To whom does Withholding tax Apply ?
To begin with, there are two parties, the Withholder and the withholdee. The Withholder is the person who is making payment and withholds some money to remit to the taxman; on the other hand, the withholdee is the recipient of the income being withheld.
One can, therefore, be in either position. You could be one making a payment for income that is subject to Withholding tax, or you could be receiving income that has Withholding tax.
Withholding Tax Rates
The Income Tax Act CAP 470, 3rd Schedule Section 5 stipulates on incomes that are subject to Withholding tax.
The Withholding tax is withheld at a percentage depending on the income being paid out, to both residents and even non-residents.
Whenever a payment for income that is subject to Withholding tax is being made, the payer is supposed to pay the net amount, the amount withheld is paid to Kenya Revenue Authority (KRA)
The rates for withholding taxes are as follows ; ( source KRA)
| Description of income | Resident | Non- Resident |
| Artists and entertainers | – | – |
| Management fees | 5% | 20% |
| Professional fees | 5% | 20% |
| Training fees (inclusive of incidental costs) | 5% | 20% |
| Winnings from betting and gaming (w.e.f. 1 Jan 2014) | 20% | 20% |
| Royalties | 5% | 20% |
| Dividends (nil for resident shareholders with>12.5%) | 5% | 10% |
| Equipment (movable) Leasing | N/A | 5% |
| Interest (Bank) | 15% | 15% |
| Interest (Housing Bond? HBI) | 10% | 15% |
| Interest on two-year government bearer bonds | 15% | 15% |
| Other bearer bonds interest | 25% | 25% |
| Rent- buildings (immovable) | 12% | 30% |
| Rent-others (except aircraft) | N/A | 15% |
| Pensions/provident schemes (withdrawal) | 10 -30% | 5% |
| Insurance Commissions | 10% | 20% |
| Consultancy and agency (from 1 July 2003) | 5% | 20% |
| Contractual and agency (from 1 July 2003) | 3% | 20% |
| Telecommunication services/Message transmission | – | 5% |
| Natural Resource Income (w.e.f. 01/01/2015) | 5% | 20% |
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