This alert brings to your attention the gazettement of the Income Tax (Withholding Tax) Rules, 2026 through Legal Notice No. 167 of 2026, which came into effect on 28 August 2026.
In summary, the Rules:
- Establish a comprehensive administrative framework governing the deduction, declaration, payment and recovery of withholding tax
- Introduce a formal mechanism for resolving disputes relating to the characterization of payments and withholding tax rates
- Clarify the procedures for assessments, demand notices and recovery of withholding tax liabilities
- Reaffirm the application of withholding tax rates prescribed under the Income Tax Act and applicable Double Tax Agreements (DTAs).
Withholding tax remains one of the Kenya Revenue Authority’s (KRA) primary collection mechanisms, requiring designated persons to deduct tax at source when making specified payments.
Historically, withholding tax obligations have been governed principally by Section 35 of the Income Tax Act, the Third Schedule to the Act and various administrative practices.
The gazettement of the Income Tax (Withholding Tax) Rules, 2026 introduces a consolidated procedural framework governing withholding tax administration, including compliance obligations, dispute resolution, assessments and enforcement.
The Rules came into force on 28 August 2026 and revoke the previous Income Tax (Withholding Tax) Rules.
Kindly download the analysis below to read the full report.
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