Kenya's tax authority has maintained the market interest rate for fringe benefit tax and the deemed interest rate on certain non-resident loans at 8% for the second quarter of 2026, according to a public notice issued by the Kenya Revenue Authority on 10 April 2026.
Kenya’s revenue authority (KRA) released a public notice on 10 April 2026 regarding updates to the market interest rate for fringe benefit tax and the deemed interest rate on specific non-resident loans for April, May, and June 2026.
The rates remain unchanged from the rates previously announced on 22 January 2026.
Fringe benefit tax
For the purposes of Section 12B of the Income Tax Act, the Market Interest Rate is 8%. This rate shall be applicable for the three months of April, May and June 2026.
Deemed interest rate
For purposes of Section 16(2) (ja) of the Income Tax Act, the prescribed rate of interest is 8%. This rate is applicable for the months of April, May and June 2026.
The withholding tax rate of 15% on the deemed interest shall be deducted and paid to the Commissioner within 5 working days.
Fringe benefit tax (FBT) on loans
Employers must pay FBT when they provide loans to directors or employees at below-market interest rates. The taxable amount is simply the gap between what interest would have been charged at the market rate versus what was actually charged.
Deemed interest on non-resident loans
When a non-resident controls a resident person (alone or with up to four others) and provides them an interest-free loan, the tax authority treats the loan as if interest were being paid at a deemed rate. This notional interest is subject to withholding tax and cannot be claimed as a tax deduction by the resident borrower.
Earlier, the KRA revised market interest rates for fringe benefit tax and the deemed interest rate on specific non-resident loans on 22 January 2026.
