Kenya: New withholding tax rules
New rules establish procedures for withholding tax deductions, returns, remittances, disputes, recovery, and succession.
October 20, 2026
The Income Tax (Withholding Tax) Rules, 2026, effective August 28, 2026, provide procedures governing the deduction, declaration, payment, and recovery of withholding tax. The new rules do not, however, provide new withholding tax rates.
In particular, the rules:
- Require a person making a payment subject to withholding tax to deduct tax at the applicable rate under the Third Schedule to the Income Tax Act or an applicable income tax treaty
- Require a person deducting withholding tax to file a withholding tax return in the prescribed form
- Require tax deducted to be remitted to the Commissioner and provide for issuance of a withholding tax certificate upon payment
- Establish a dispute resolution procedure when a payee disputes the nature of a payment or the withholding tax rate applied
- Allow the Commissioner to issue assessments, additional assessments, or demand notices when withholding tax has not been properly declared or remitted
- Provide for recovery of unpaid withholding tax under the Tax Procedures Act
- Address withholding tax responsibilities following the death of an individual responsible for the obligations, a change in the identity of a payer, or succession
KPMG observation
The rules reaffirm the availability of treaty relief when the applicable conditions are satisfied and provide a formal process for resolving disputes concerning payment characterization, withholding tax rates, and treaty benefits.
Read an October 2026 report prepared by the KPMG member firm in Kenya