KRA Sets Fringe Benefit and Deemed Interest Rates at 8% for Final Quarter of 2025

The Kenya Revenue Authority (KRA) has announced that the market interest rate for fringe benefit tax will remain at 8 per cent for the months of October, November, and December 2025. The directive, issued through a public notice on Tuesday, October 21, applies to all employers and entities governed under Section 12B of the Income Tax Act.

According to the notice, the same rate of 8 per cent has also been prescribed for deemed interest under Section 16(2)(ja) of the Act for the same three-month period. KRA emphasized that this adjustment ensures uniformity in tax calculations related to loans provided by employers to employees and other financial arrangements subject to the deemed interest rate.

The Authority further directed that withholding tax at the rate of 15 per cent on deemed interest must be deducted and remitted to the Commissioner within five working days. This requirement, KRA stated, is part of ongoing efforts to strengthen compliance and improve timely tax remittance across all categories of taxpayers.

In the public notice, the Commissioner for Micro and Small Taxpayers reiterated KRA’s commitment to supporting taxpayers through accessible digital services. Employers and financial institutions were advised to use the prescribed rates in computing their tax obligations for the final quarter of the year.

KRA encouraged taxpayers to seek clarification from their nearest Tax Service Offices or contact the Authority’s call centre for assistance. The agency reaffirmed that all tax payments and filings must be made through official KRA systems, adding that it will not be responsible for payments made outside authorized channels.