KRA announces new prescribed interest rates for 2026

The Kenya Revenue Authority (KRA) has announced the prescribed interest rates that will apply to various tax provisions during different periods in the second half of 2026. 

In a notice on Wednesday, July 8, KRA said the new rates, which take effect from July 2026, set the prescribed interest at 8 percent across the three tax categories, with varying application periods.

For Fringe Benefit Tax, KRA has set the market interest rate at 8 percent for the third quarter of 2026, covering the months of July, August and September.

“For the purposes of Section 12B of the Income Tax Act, the Market Interest Rate is 8%. This rate shall be applicable for the three months of July, August and September 2026,” the notice read.

KRA has also announced that the prescribed interest rate for deemed interest will be 8 percent during the same three-month period of July, August and September 2026.

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“For purposes of Section 16(2)(ja) of the Income Tax Act, the prescribed rate of interest is 8%. This rate is applicable for the months of July, August and September 2026,” the notice added.

The tax authority further stated that withholding tax on deemed interest will remain applicable and must be remitted to the Commissioner within the stipulated timeline.

“Withholding tax rate of 15% on the deemed interest shall be deducted and paid to the Commissioner within 5 working days,” the notice further read.

For Low Interest Benefit, KRA has prescribed an interest rate of 8 percent for a longer six-month period running from July through December 2026.

“For purposes of Section 5(2A) of the Income Tax Act, the prescribed rate of interest is 8%. This rate is applicable for the months of July, August, September, October, November and December 2026,” the notice concluded.

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