KRA offices in Nairobi/ FILE
The Kenya Revenue Authority (KRA) has set the market interest rate for calculating fringe benefit tax at eight per cent for the three months from July to September 2026.
In a public notice issued on Wednesday, the tax agency said the rate takes effect under Section 12B of the Income Tax Act and will apply throughout July, August and September.
KRA also announced that the prescribed deemed interest rate under Section 16(2)(ja) of the Income Tax Act has been set at eight per cent for the same three-month period.
"For purposes of Section 16(2)(ja) of the Income Tax Act, the prescribed rate of interest is 8%. This rate is applicable for July, August and September 2026," KRA said.
The authority reminded taxpayers that a 15 per cent withholding tax on deemed interest must be deducted and remitted to the Commissioner within five working days.
KRA further said the prescribed rate for low interest benefit under Section 5(2A) of the Income Tax Act has also been maintained at eight per cent.
The authority issued the three prescribed rates in a single public notice to guide taxpayers on the applicable interest rates for the relevant tax provisions during the specified periods in 2026.
The notice sets out the effective dates for each rate and the corresponding sections of the Income Tax Act under which they apply.
Unlike the other two rates, the low interest benefit rate will remain in force for six months, covering July, August, September, October, November and December 2026.
"KRA notifies taxpayers that the Market Interest Rate, Deemed Interest Rate, and Low Interest Benefit prescribed rate have been set at 8% for the applicable periods in 2026. Taxpayers are encouraged to take note of the applicable months and comply accordingly," the notice stated.
The authority
advised taxpayers to take note of the applicable periods and comply with the
relevant tax requirements.
