When to remit withholding tax you deducted
The five-working-day window KRA gives for remitting withholding tax, the penalty and interest for paying late, and a routine that keeps you on time.
By Achekam · · 4 min read · For Running a business businesses in Kenya
Deducting withholding tax is the easy part. The accounts team pays the consultant's invoice, takes off the tax, and the supplier gets the net amount. The money that was held back then sits in the business's bank account, and unless someone acts quickly, it stays there.
KRA does not give you long. The window for paying over withholding tax is measured in working days, not months, and missing it brings a penalty and interest on money that was never yours to keep. This guide explains the deadline, the cost of missing it, what happens if the tax was never deducted at all, and how to build remittance into the way you pay suppliers.
Which payments are caught
KRA's withholding tax guidance lists the payments subject to withholding tax: interest, dividends, royalties, pensions, gambling winnings, management, professional, training and contractual fees, digital content monetization, sales promotion, marketing and advertising services, insurance commission and rent for immovable property.
For a typical business, the ones that come up most often in the payables run are professional and management fees, contractual payments, marketing and advertising, and rent. Rates differ by category and by whether the payee is resident, and are covered in withholding tax on supplier payments.
Five working days after the deduction
KRA says the payer of incomes subject to withholding tax must deduct the tax at source and remit it to KRA within 5 working days after the deduction is made. KRA's withholding tax FAQ gives the same five-working-day window.
The clock starts at the deduction, which in practice is when you pay the supplier. A worked example in words: a business pays a firm of engineers on a Monday, net of withholding tax. Counting working days only, the tax must reach KRA by the following Monday. If a public holiday falls in that week, it does not count as a working day, but do not lean on that; aim to remit on the same day you pay the supplier.
KRA's withholding tax page states the five-working-day rule along with the rates and the certificate process, and is the page to check before relying on any summary, this one included.
One caution: this window applies to withholding income tax. Withholding VAT, deducted by appointed agents, raises its own timing questions, and the sources do not agree on its due date. Agents should read duties of an appointed withholding VAT agent rather than assume the same rule.
Penalty and interest for late remittance
KRA says failure to deduct or withhold and remit withholding tax is an offence attracting penalty and interest, and that the penalty for late payment of any withholding tax is 5% of the tax due, at the time of writing.
Interest runs on top. The Tax Procedures Act, as published on Kenya Law, charges late payment interest of one per cent per month or part of a month, as simple interest, on unpaid tax from the due date until payment. The interest is in addition to the penalty, and the accrued interest may not exceed the principal tax.
The "part of a month" wording means that even a short delay attracts a month's interest. A remittance that slips a few days past the fifth working day costs the 5% penalty and a month of interest, for no benefit at all.
Failing to deduct at all
Sometimes the problem is earlier: the payment went out gross, with nothing withheld. KRA treats failure to deduct as an offence too. For two particular kinds of withholding, it sets a specific penalty: failure to deduct withholding VAT or withholding rental income tax attracts a penalty of 10% of the tax involved.
So paying a supplier gross does not move the obligation to the supplier. Talk to your adviser straight away if you discover a payment that should have been subject to withholding went out without it, rather than waiting for KRA to find it.
Generating the payment slip and recording the PRN in Achekam
To remit, the business generates a payment slip from KRA's system, which carries a payment registration number, or PRN, and pays against it. The PRN is what ties your payment to the right tax and period at KRA.
Achekam records a Kenyan tax payment with KRA's own reference and receipt, the PRN. It never generates a payment reference itself, refuses Kenya's discontinued paybill 572572, and needs a second person to confirm each payment. For withholding tax, where there may be several small remittances in a month, that confirmation is a useful check that each payment matches a deduction.
Achekam's filing calendar sets Kenyan deadlines to the end of the day in Africa/Nairobi, and leaves out any deadline whose rule is awaiting approval or contested, saying why. A five-working-day window tied to each payment is better managed in your payment routine than in a calendar, as below. For the wider set of Kenyan dates, see Kenya's tax calendar.
A payment-run routine that builds it in
- When preparing the supplier payment run, flag every payment subject to withholding.
- Calculate the tax on each and approve the net payments.
- On the same day the suppliers are paid, generate the PRN for the withheld tax.
- Pay KRA against the PRN.
- Record the payment in Achekam with the PRN and receipt, for a second person to confirm.
- Check that certificates are issued to the suppliers, who will need them for their own returns.
The simplest rule is the safest: no supplier payment with withholding leaves the bank without the matching KRA payment following it the same day. Make that the rule for your next payment run.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
