The Kenya Revenue Authority has issued guidelines outlining eligibility requirements, documentation, review timelines, and refund procedures for non-residents seeking refunds of tax incorrectly withheld under Double Tax Agreements or paid in error.
The Kenya Revenue Authority (KRA) has published new guidelines titled Taxpayer Guidelines on the Procedure for Processing Refund Claims Arising from Double Tax Agreements (DTAs) and Tax Paid in Error by Non-Resident Person, which clarify Kenya’s tax laws, including rules on income earned by non-residents and Double Tax Agreements (DTAs).
Tax may be wrongly deducted when a Double Tax Agreement (DTA) gives taxing rights to the other country, when the non-resident has no Permanent Establishment (PE) in Kenya, or when the income is exempt under a treaty. The guidelines give nonresidents and withholding agents a standard procedure, a list of documents, and clear timelines for these claims.
The rules cover income such as dividends, interest, royalties, and fees for technical services. They apply to nonresidents, withholding agents, and anyone else involved in settling a claim. The processing follows the Tax Procedures Act, the Income Tax Act, the Privileges and Immunities Act where relevant, and the DTAs in force in Kenya.
Who can apply
A non-resident can file a claim if they live in a country that has a DTA with Kenya and meet that treaty’s conditions. The tax must have been deducted and remitted to KRA, and Kenya must have had no right to tax the income. The tax cannot have been refunded, credited, or settled already, and it cannot be the subject of an active dispute before a court or tribunal.
Documents and how to apply
The claimant sends a written application letter to the Deputy Commissioner, Debt, Refunds and Ledger Management Division. The letter must state the claimant’s name and address, country of residence, and the withholding agent’s details. It must also give the nature and amount of the income, the tax deducted, the dates of deduction and remittance, the DTA article relied on, the reason the tax was paid in error, and the amount claimed.
The letter must come with a valid Tax Residency Certificate from the claimant’s home tax authority, the relevant DTA provisions, and the contracts and invoices behind the payment. Supporting papers also include the Withholding Tax Certificates, proof of payment to the non-resident, and proof that the tax reached KRA. The claimant must sign the declaration in Appendix I and use the checklist in Appendix II before filing. KRA may ask for any other documents it needs to decide the claim.
Review timelines
KRA checks the application for completeness within five days of receiving it. If anything is missing, KRA notifies the claimant, who has seven days to respond unless KRA sets a different period. If the claimant does not respond, KRA decides based on the documents it has.
Once the file is complete, KRA carries out a technical review within 30 days. KRA may order an audit if the claim needs closer examination. After the review, KRA tells the claimant the outcome and the reasons for the decision. If the refund is approved, the claimant informs the withholding agent, who must apply through iTax to cancel the withholding certificate.
Refund payment
When KRA approves the claim, the withholding agent reverses the transaction in the iTax system using the approval and supporting documents. Once the cancellation is approved, the Withholding Tax Certificate is cancelled and a Withholding Adjustment Voucher (WAV) is generated. The agent uses the voucher to offset the restored credit against current or future withholding tax liabilities. The agent then refunds the erroneously withheld amount to the nonresident.
If the withholding agent is dormant, winding up, or unable to use the credit, it can ask KRA to switch the cancellation to a cash settlement. Both parties must keep documents proving the settlement.
When KRA may reject a claim
KRA may reject a claim if Kenya holds taxing rights over the income. It may also reject a claim if the claimant fails the treaty conditions, does not provide information KRA reasonably requests, or has already received a refund or credit for the same tax. Claims tied to an ongoing dispute or those that break tax law will also fail.
Duties of each party
Claimants must provide accurate information and valid documents. They must also name the DTA article they rely on and tell KRA about any other relief received for the same tax. Claimants cannot submit duplicate or unsupported claims.
Withholding agents must check the recipient’s tax residence, Kenya’s domestic taxing rights, whether a DTA applies, and whether treaty conditions are met before withholding tax. They should keep proper records and ask KRA for guidance when a DTA’s application is unclear. Correct checks at the point of payment reduce the number of refund claims.
Contact details
Claimants or withholding agents can reach KRA on +254 20 4 999 999 or +254 711 099 999, or by email at [email protected]. The office is at Times Tower Building, Haile Selassie Avenue, P.O. Box 48240, 00100.
