What is Withholding Tax?
Withholding Tax (WHT) is a tax deducted at the source when making specific payments, such as professional fees, dividends, interest, royalties, and management fees. It applies to both resident and non-resident entities in Kenya and must be remitted to the Kenya Revenue Authority (KRA) by the 20th of the following month.
Businesses are required to deduct WHT from payments, file returns on iTax, and issue WHT certificates to beneficiaries. Failure to comply can lead to payment of penalties, interest, and tax disputes.
Consequences of Non-Compliance
Failure to comply with WHT regulations can result in:
Penalties & Interest: Late filing attracts a penalty of KShs. 10,000 or 5% of the tax due (whichever is higher), plus interest at 1% per month on unpaid tax. Late payment or non payment of withholding tax attracts 10% of the principal tax due plus interest and penalties.
Denial of tax Deductions: If WHT is not deducted and remitted, the expense may not be allowed as a tax deduction, increasing your corporate tax liability.
KRA Audits & Investigations: Non-compliance may trigger KRA audits, leading to additional assessments and potential disputes.
Legal Consequences: Persistent non-compliance can result in legal action or business license complications.
How Frankbridge Advisory Ltd Can Help
We provide end-to-end withholding tax compliance services, ensuring your business meets all KRA requirements. Our expertise includes:
Accurate WHT Deductions and Rate Application
Applying the correct Withholding Tax (WHT) rates can be tricky, especially with different rates for services like consultancy, rent, dividends, and cross-border transactions. Misclassifying payments or using the wrong rate can lead to penalties or tax disputes. We ensure that every transaction is correctly assessed, the right rate is applied, and your deductions are in full compliance with KRA regulations.
Timely WHT Filing and Remittance
Withholding tax must be declared and paid by the 20th of each month, and missing the deadline can result in fines or interest charges. Keeping track of multiple payments, generating iTax returns, and ensuring timely remittance is a challenge for many businesses. We handle the entire process, from preparing and filing returns to making payments on time, so you can avoid unnecessary penalties and compliance headaches.
WHT Certificate Issuance
Your service providers rely on Withholding Tax certificates to claim tax credits, and delays in issuing these certificates can lead to disputes or strained business relationships. We ensure that all certificates are promptly generated and properly recorded, making tax credit claims seamless for your vendors while keeping your records audit-ready.
KRA Audit Support and Dispute Resolution
A KRA audit can be daunting, especially if there are inconsistencies in your WHT filings. If your business is selected for an audit, we assist in gathering the necessary documentation, responding to queries, and negotiating on your behalf to ensure a fair resolution. Our expertise in tax dispute resolution ensures that your business is protected and any potential risks are mitigated.
Withholding Tax Advisory Services
Kenyan tax laws are constantly evolving, and understanding when WHT applies, how to structure transactions to remain compliant, and how to minimise tax exposure requires expert guidance. We provide tailored advisory services to help your business navigate these complexities, ensuring that your tax obligations are met while avoiding unnecessary financial strain.
Tax Training and Compliance Workshops
Withholding tax compliance isn’t just about meeting deadlines—it’s about having the right knowledge to handle tax matters confidently. We offer hands-on training sessions for finance and tax teams, equipping them with the expertise needed to manage WHT compliance internally, reduce errors, and improve overall tax efficiency.
Legislative Updates
Tax laws and regulations are constantly evolving, and staying informed is key to maintaining compliance and avoiding unexpected tax liabilities. We provide timely updates on:
Changes in the tax laws and exemptions
New compliance requirements
Key updates from the Kenya Revenue Authority (KRA), National Treasury, and Parliament
Insights on disputes that have been decided in the courts and tax tribunal and policy changes affecting businesses
Stay ahead of tax changes. Drop your email HERE to receive exclusive tax updates from Frankbridge Advisory straight to your inbox.
Why Choose Frankbridge Advisory Limited?
At Frankbridge Advisory Limited, we take the stress out of withholding tax compliance, ensuring your business stays on top of its obligations while avoiding costly mistakes. Whether you need help with filings, audits, or advisory support, we’re here to provide expert guidance every step of the way.
Epertise in Kenyan tax laws
Proactive Risk management
End-to-End WHT Solutions
Dedicated support
Proven track record
Get in Touch with Us Now for Your Withholding Tax Compliance Needs!
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Contact us today to ensure your business stays compliant while maximising tax-saving opportunities.
Frequently Asked Questions (FAQs)
Who is required to deduct Withholding Tax?
How do I file Withholding Tax in Kenya?
What happens if I fail to remit Withholding Tax?
Can WHT be refunded?
How can Frankbridge Advisory Ltd help with WHT compliance?
Ask us about our Withholding Tax Compliance services.
