Kenya Revenue Authority: Fringe Benefit Tax Remains at 15% Amid Deemed Interest Rate Revision

• The Kenya Revenue Authority has updated the Fringe Benefit Tax rate to 15% of the grossed-up value of benefits.
• The Deemed Interest Rate has been revised upwards to 8% per annum for July, August, and September 2026.
• The changes will apply to all fringe benefits provided by employers in Kenya.
• Corporate entities must adjust their financial reporting to reflect the new rates and may face increased tax liabilities.
• Compliance officers and lawyers should advise clients on these changes and ensure compliance with tax regulations.

The KRA has a statutory mandate to collect taxes and enforce tax laws in Kenya.

The Kenya Revenue Authority (KRA) has issued a public notice updating the Fringe Benefit Tax (FBT) and Deemed Interest Rate. The changes are effective from April 1, 2024, and will impact corporate entities providing fringe benefits to employees. According to the notice, the FBT rate remains unchanged at 15% of the grossed-up value of the benefit, but the deemed interest rate has been revised upwards. The new rate is set at 8% per annum for July, August, and September 2026.

The KRA has also clarified that the changes will apply to all fringe benefits provided by employers, including housing allowances and other forms of remuneration.

The Fringe Benefit Tax is a key component of Kenya's tax regime, aimed at taxing non-monetary benefits provided by employers to employees. The Deemed Interest Rate, on the other hand, is used to calculate the taxable value of fringe benefits. The changes to these rates are in line with the government's efforts to increase revenue collection and align with international best practices.

The KRA has a statutory mandate to collect taxes and enforce tax laws in Kenya. The public notice issued by the authority is a key tool for communicating changes to taxpayers and ensuring compliance with tax regulations.

The updated Fringe Benefit Tax and Deemed Interest Rate will have significant implications for corporate entities operating in Kenya. Employers must now adjust their financial reporting to reflect the new rates, which may result in increased tax liabilities. Compliance officers and lawyers should take note of these changes and advise clients accordingly.

The KRA's efforts to increase revenue collection through tax reforms are a key aspect of the government's economic development strategy. The updated Fringe Benefit Tax and Deemed Interest Rate are part of this broader effort, aimed at ensuring that taxpayers contribute their fair share towards national development.

Lawyers and compliance officers should watch for the updated Fringe Benefit Tax and Deemed Interest Rate in Kenya, as these changes may impact corporate clients' tax obligations and require adjustments to financial reporting.

Source: Original reporting via Public Notices