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Originally published by Kenyanstop
January 22, 2026
5h ago
KRA Sets New Interest Rates for Employee Loans and Office Perks
The directive will take effect for January, February, and March, with employers directed to comply with the regulations in their accounting systems...
✨ Key Highlights
The Kenya Revenue Authority (KRA) has set new interest rates for employee loans and fringe benefits at 8 per cent for the first half of 2026. This directive provides crucial guidance for employers on calculating taxable benefits and ensuring compliance with tax laws.
- The 8 per cent market interest rate will apply for January, February, and March 2026 for fringe benefit tax on perks such as company cars, housing, or loans under Section 12B of the Income Tax Act.
- For low-interest employee loans, the prescribed interest rate is also 8 per cent for January through June 2026, impacting calculations under Section 5(2A) of the Income Tax Act.
- Employers are required to deduct a 15 per cent withholding tax on deemed interest from such loans and remit it to the Commissioner within five working days.
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