To make payments for withholding taxes, you generate a payment slip from the KRA itax portal and select withholding tax as the sub-section. You can pay for the amount at any KRA partner bank.
What is Withholding Tax
Withholding tax is income withheld by a person making payment and remitted to the taxman. The payer, rather than the recipient, pay it as tax to taxman.
An example is when marketing companies pay commissions to their marketers, the company will withhold some of the commissions and pay to Kenya Revenue Authority as tax on behalf of the marketers.
To whom does Withholding tax Apply ?
To begin with, there are two parties, the Withholder and the withholdee. The Withholder is the person who is making payment and withholds some money to remit to the taxman; on the other hand, the withholdee is the recipient of the income being withheld.
One can, therefore, be in either position. You could be one making a payment for income that is subject to Withholding tax, or you could be receiving income that has Withholding tax.
This is a method whereby the payer of certain incomes is responsible for deducting tax at source from payments made and remitting the deducted tax to KRA.
The percentage deducted varies between incomes and is dependent on whether you are a resident or non- resident.
How do I pay Withholding Tax?
Any amount withheld, should be remitted to KRA on or before the 20th day of the following month.
Payment of withholding tax is done online via iTax, generate a payment slip and present it at any of the appointed KRA banks to pay the tax due.
You can also pay via Mpesa.
Use the KRA Pay bill Number 572572.
The Account Number is the Payment Registration number quoted at the top right corner of the generated payment slip.
When you successfully remit the deducted amount to KRA, we shall send a Withholding Certificate to the email you registered with on iTax.
Withholding tax is not a final tax. One is required to declare the income and the withholding tax certificates upon filing individual tax returns and pay any tax due,
What is the penalty for late filing?
Date: Deducted and remitted on or before the 20th of the following month.
Penalty: Either 5% of the tax payable or twenty thousand shillings, whichever is higher.
The rates for withholding taxes are as follows ; ( source KRA)
|Description of income||Resident||Non- Resident|
|Artists and entertainers||–||–|
|Training fees (inclusive of incidental costs)||5%||20%|
|Winnings from betting and gaming (w.e.f. 1 Jan 2014)||20%||20%|
|Dividends (nil for resident shareholders with>12.5%)||5%||10%|
|Equipment (movable) Leasing||N/A||5%|
|Interest (Housing Bond? HBI)||10%||15%|
|Interest on two-year government bearer bonds||15%||15%|
|Other bearer bonds interest||25%||25%|
|Rent- buildings (immovable)||12%||30%|
|Rent-others (except aircraft)||N/A||15%|
|Pensions/provident schemes (withdrawal)||10 -30%||5%|
|Consultancy and agency (from 1 July 2003)||5%||20%|
|Contractual and agency (from 1 July 2003)||3%||20%|
|Telecommunication services/Message transmission||–||5%|
|Natural Resource Income (w.e.f. 01/01/2015)||5%||20%|