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.
This comes days after KRA announced the removal of excise duty on bottled water following changes introduced under the Finance Act, 2026.
In a notice on Monday, July 6, the agency said the amendment took effect on July 1.
KRA confirmed that the removal of the tax also eliminates the requirement for excise stamps on bottled water produced or imported from the effective date.
"Bottled water manufactured or imported on or after this date will not be subject to excise duty and will not require to be affixed with excise stamps," the notice read.
KRA stated that it will soon provide guidance on how businesses should handle unused excise stamps following the tax change.
"The Commissioner will issue detailed guidelines on the return of unutilized stamps and the decommissioning of digital stamps, which will be published on the official KRA website," the notice added.
Despite the removal of the excise duty, KRA reminded manufacturers that they are still required to comply with their tax obligations for the period before the amendment came into force.
"Manufacturers are reminded of their obligation to submit their Excise Duty Returns for the month of June 2026 and pay the taxes due by 20th July, 2026," the notice further read.
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