The Kenya Revenue Authority (KRA) has set the market interest rate for fringe benefit tax and deemed interest at 8% for April to June 2026. The notice, dated Friday, April 10, urges employers to update their systems promptly. This adjustment reflects routine quarterly reviews of market rates.
The Kenya Revenue Authority (KRA) has announced an 8% market interest rate for Fringe Benefit Tax and Deemed Interest Rate, effective for April to June 2026. In a notice dated Friday, April 10, KRA stated, "The market interest rate for Fringe Benefit Tax and the Deemed Interest Rate has been set at 8 per cent for the period April to June 2026."
Fringe Benefit Tax applies when employers provide loans to employees at below-market rates or non-cash benefits such as cars. It is calculated as the difference between the market rate and actual interest paid, under section 12B of the Income Tax Act, effective since June 12, 1998. The rate also covers loans extending beyond employment termination.
Deemed interest covers loans to non-employees without interest or at low rates. Additionally, a 15% withholding tax on deemed interest must be deducted and remitted to the Commissioner within five working days.
Employers must update payroll and accounting systems to comply and avoid penalties. This change is part of KRA's routine quarterly review of market rates to reflect economic conditions and ensure consistent tax administration.