The Kenya Revenue Authority (KRA) has unveiled updated tax rates for fringe benefits, deemed interest, and low-interest loans, which will take effect in January 2025.

These rates, outlined under the Income Tax Act, are intended to guide taxpayers for the first half of the year.

For fringe benefit tax, the notice specified, “For the purposes of Section 12B of the Income Tax Act, the Market Interest Rate is 13 per cent. This rate shall be applicable for the months of January, February and March 2025.”

The prescribed rate of interest for deemed interest under Section 16(2)(ja) has also been set at 13 per cent for the same period.

“Withholding tax rate of 15 per cent on the deemed interest shall be deducted and paid to the Commissioner within 5 working days,” the notice added.

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Additionally, the prescribed interest rate for low-interest benefits, as stipulated in Section 5(2A) of the Income Tax Act, has been adjusted to 14 per cent.

This rate will apply from January to June 2025.

The KRA reiterated the importance of adhering to these updated rates, stating, “These provisions are crucial for compliance with the Income Tax Act.”

Employers and taxpayers are required to take note of the new rates and adjust their calculations accordingly to ensure timely remittances.