Withholding tax is distinct form of individual tax returns and has to be paid on a monthly basis. After filing withholding tax, iTax generates a slip, which the withholdee presents to a bank and makes payments against it or uses paybill 572572. You are finally presented with a withholding certificate in your iTax registered email to complete the process. Here is a complete guide on how to file withholding tax in Kenya
- Access KRA iTax
- Select “File my returns”
- Go to login page
- Enter your company PIN Number and secret Password
- Proceed to the “Payments”
- Choose “Payment registration.”
When to file KRA withholding tax: The amount withheld must be remitted to KRA and filed before the 20th day of the following month
It is not advisable to click on the “Return” button since withholding tax does not exist and you are acting on behalf of someone else,
- Go to payments.
- You will be provided with an “e-Payment registration form”
- Usually it has your company information.
- Complete the “Tax Head”
- Select the drop-down menu
- Pick “Income Tax”
Being an agent of the withholdee your reporting is of another person’s tax hence it is called income tax.
- Verify that “(0105) Income Tax – Withholding” is the “Tax Sub Head.”
- Pick between options on returning withholding tax.
- Either Excel (recommended for multiple clients as opposed to shunning away Web Forms which are singularly filled)
Excel forms
- The process involves download,
- Fill the provided excel sheet
- Save the Excel sheet it in your device.
- You are then required to validate,
- Upload through iTax upload button.
In case you are using a Web Form
- Choose the transaction from list.
- Use the table provided to establish relevant withholding tax rates.
- Fill the withholdee Pin Number and the iTax system will auto-generate their information including names, email and addresses.
- Enter the “Gross Amount” you intend to pay for the withholdee.
- Click on “Add” for other similar transactions.
- You can continue adding until withholdee list is captured
- Select the “Mode of Payment” with the “Receiving Bank Name.”
- Click submits to finish returning your withholding tax.
- iTax Download Link” to enable you to access your “Payment Slip” for the cleared withholding tax if all the details are correctly completed. Alternatively, your client (withholdee will receive a slip in their email.
- You can then download the slip and print a pair.
- Present the two slips to the bank and make payments against them.
- Alternatively, you can use the M-Pesa paybill 572572 to pay your KRA withholding tax.
What is the penalty for late filing?
Date: Deducted and remitted on or before the 20th of the following month.
Penalty: Either 5% of the tax payable or twenty thousand shillings, whichever is higher.
KRA withholding tax rates
| Description | Resident | Non ? Resident |
|---|---|---|
| Artists and entertainers | - | - |
| Management fees | 5% | 20% |
| Professional fees | 5% | 20% |
| Training fess (inclusive of incidental costs) | 5% | 20% |
| Winnings from betting and gaming (w.e.f. 1 Jan 2014) | 20% | 20% |
| Royalties | 5% | 20% |
| Dividends (nil for resident shareholders with>12.5%) | 5% | 10% |
| Equipment (movable) Leasing | N/A | 5% |
| Interest (Bank) | 15% | 15% |
| Interest (Housing Bond ? HBI) | 10% | 15% |
| Interest on two ? year government bearer bonds | 15% | 15% |
| Other bearer bonds interest | 25% | 25% |
| Rent ? buildings (immovable) | 12% | 30% |
| Rent ? others (except aircraft) | N/A | 15% |
| Pensions/provident schemes (withdrawal) | 10 ? 30% | 5% |
| Insurance Commissions | 10% | 20% |
| Consultancy and agency(from 1 July 2003) | 5% | 20% |
| Contractual and agency (from 1 July 2003) | 3% | 20% |
| Telecommunication services/Message transmission | - | 5% |
| Natural Resource Income (w.e.f. 01/01/2015) | 5% | 20% |
There you have it how to file withholding tax in Kenya. Make a point of confirming the rates of each category with a withholding tax calculator and whether you are a resident or non-resident from the KRA portal.
