Kenya has increased the market interest and deemed interest rates to 9% for the October–December 2026 quarter, up from 8%, with deemed interest subject to a 15% withholding tax.
The Kenya Revenue Authority (KRA) has issued a public notice on 22 October 2026 on the market interest rate for fringe benefit tax purposes and the deemed interest rate for certain non-resident loans for October, November, and December 2026, which has been increased to 9% from the 8% rate for the previous 3-month period.
A withholding tax rate of 15% on the deemed interest shall be deducted and paid to the Commissioner within 5 working days.
Fringe benefit tax applies to low-interest loans provided by employers to directors or employees, based on the difference between market-rate interest and actual interest paid.
Deemed interest applies to interest-free loans provided or secured by non-residents to resident persons controlled by non-residents. It is subject to withholding tax and is not tax-deductible.
