NAIROBI, Kenya – The Kenya Revenue Authority (KRA) has retained the market interest rate for Fringe Benefit Tax and the prescribed rate of interest for Deemed Interest at 8 per cent for the final quarter of 2025.
In a public notice issued on Tuesday, the tax agency said the rates will apply for the months of October, November, and December 2025, in line with the Income Tax Act.
“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 October, November, and December 2025,” the notice stated.
The same rate will also apply to deemed interest under Section 16(2)(ja) of the Act, according to KRA.
The authority further reminded taxpayers that a withholding tax of 15 per cent on deemed interest must be deducted and remitted to the Commissioner within five working days.
The notice, signed by the Commissioner for Micro and Small Taxpayers, also highlighted that KRA services remain accessible via the *222# mobile platform, free of charge.
What Fringe Benefit Tax Means
Fringe Benefit Tax (FBT) is a levy charged on employers who provide loans to employees, directors, or their relatives at interest rates below the prevailing market rate.
The taxable value of the fringe benefit is the difference between the market interest rate and the actual interest charged on the loan.
The tax is payable by the employer each month and must be remitted by the 9th of the following month.
According to the Income Tax Act, FBT has been in effect since June 12, 1998, and continues to apply as long as a loan remains unpaid — even after termination of employment.
Failure by employers to remit the tax attracts a 25 per cent penalty on the amount due, while late payment incurs an additional 5 per cent penalty.
