The Kenya Revenue Authority (KRA) has announced the new fringe benefits tax and deemed interest tax rates to serve for the next three months between July and September.
In a notice on Tuesday, July 8, the taxman noted that the market interest rate - the rate at which borrowers can obtain funds from lenders - will be 8 per cent for this period as per Section 12(b) of the Income Tax Act.
For fringe benefits, this means employers offering staff low-interest or interest-free loans must calculate the taxable benefit using the 8 per cent market interest rate. The employer, not the employee, is liable to pay the fringe benefit tax, which is calculated on the difference between the deemed rate and the actual interest charged.
Kenya Revenue Authority offices Photo KRA It also applies to non-cash benefits offered to an employee by an employer, including vehicles, cars, or other forms of perks that are not part of the employee's gross earnings.
