Withholding Tax (WHT)
Understanding tax deducted at source in Kenya.
What is WHT?
Official Definition (KRA):
Withholding Tax is tax deducted at source from payments made to suppliers, service providers, or other parties. The payer deducts the tax and remits it to KRA on behalf of the payee.
In Simple Terms:
When you pay someone for services or goods, you might need to deduct tax from that payment and send it to KRA. The person receiving the payment can then claim credit for this tax when filing their return.
WHT Rates
Common WHT Rates
Professional fees5% resident / 20% non-resident
Management fees5% resident / 20% non-resident
Rent - buildings (immovable)10% resident / 30% non-resident
Dividends10% resident / 15% non-resident
Interest (bank)15%
Royalties / natural resource income5% resident / 20% non-resident
Digital content monetization5% resident / 20% non-resident
When WHT Applies
You Must Deduct WHT If:
- You're a business making payments above certain thresholds
- You pay rent to a landlord
- You pay professional fees (lawyers, accountants, consultants)
- You pay interest on loans
- You pay dividends to shareholders
WHT Exemptions
- • Resident management, professional, training, and contractual fees of KES 24,000 or less in a month
- • Payments to some tax-exempt bodies and qualifying entities
- • Payments to government entities
- • Other statutory exemptions under the Income Tax Act and applicable treaty rules
Claiming WHT Credit
How to Claim:
If WHT was deducted from payments made to you, you can claim credit for this tax when filing your annual return. The WHT credit reduces your final tax liability.
Total Tax Due: KES 100,000
- WHT Credit: KES 15,000
Net Tax Payable: KES 85,000
Required Documents
- • WHT certificates from payers
- • Payment receipts showing WHT deduction
- • Bank statements showing net payments received
Compliance Requirements
As a Payer (Deducting WHT)
- • Deduct WHT when making the payment
- • Remit WHT to KRA within 5 working days after deduction
- • Generate the withholding certificate through iTax after successful remittance
- • Keep records of all WHT deductions
As a Payee (Receiving Payment)
- • Ensure you receive WHT certificate from payer
- • Claim WHT credit in your annual return
- • Keep all WHT certificates for at least 5 years
- • Verify WHT was remitted to KRA
Penalties for Non-Compliance
- • Late payment penalty of 5% of the tax due
- • Interest at 1% per month on unpaid WHT
- • Failure to deduct and account for WHT can attract higher statutory penalties