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 (2024)
Rent (Residential)10%
Rent (Commercial)12%
Professional Fees5%
Interest15%
Dividends5%
Royalties20%
Management/Consultancy Fees20%
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
- • Payments to registered VAT suppliers (for goods/services)
- • Payments below KES 24,000 per month (for some services)
- • Payments to government entities
- • Payments to registered charities
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)
- • Issue WHT certificate to payee within 30 days
- • Remit WHT to KRA by 20th of following month
- • File WHT return (Form P10) monthly
- • 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
- • KES 10,000 or 5% of tax (whichever is higher) for late remittance
- • Interest at 1% per month on unpaid WHT
- • Additional penalties for failure to issue certificates