KRA Announces New Tax Rates For Employee Loans
The new tax rates on loans made available to Kenyans at their places of employment has been raised by the Kenya Revenue AuthorityKenya Revenue Authority.
KRA declared that it would be increasing the Fringe Benefit Tax rate from 13 to 15 percent in a notice dated January 23.
Employers often pay fringe tax on each loan they provide to their employees. When compared to loans from banks and other financial organizations, the loans provided by an employer typically have cheaper interest rates.
The first three months of 2024 will see the implementation of the new rate, according to KRA.
Employers may be compelled to raise the interest rates on loans they provide at their places of employment, even if the levy solely targets them.
KRA Announces New Tax Rates For Employee Loans
Consequently, work-related loans will come with higher interest rates than in prior months.
However, there was also a 2% increase in the Deemed Interest Rate tax.
“The prescribed rate of interest under section 16(2)(a) of the Income Tax Act is 15%. This rate is going to be in effect for January, February, and March of 2024.
“Withholding tax rate of 15% on the deemed interest shall be deducted and paid to the Commissioner within five working days following the computation,” the notice reads in part.
In addition, KRA increased the Low-Interest Benefit rate by 4% from October to December 2023, when it was first established at 14%.
KRA Announces New Tax Rates For Employee Loans
