Deducting withholding tax from Kenyan suppliers
How much withholding tax a Kenyan business deducts when it pays consultants, trainers and contractors, how to remit it by the 20th and where eTIMS fits.
By Achekam · · 4 min read · For Running a business businesses in Kenya
The trainer who ran your staff workshop sends an invoice. The accountant who prepared your management accounts sends hers. A contractor finishes refitting the shop. Each expects to be paid what the invoice says. In Kenya, for many payments like these, the business paying is required to keep back part of the amount as withholding tax, pay it to KRA, and pay the supplier the rest.
Get it wrong and the cost lands on you. Pay the full invoice and you may still owe the tax you should have withheld. Withhold and forget to remit, and you are holding KRA's money. This article sets out the main rates at the time of writing, the remittance date, how withholding tax sits beside eTIMS, and what Achekam will compute for you.
Management, professional and training fees
Kenyan withholding tax on management, professional and training fees is 5% when the payee is resident and 20% when the payee is non-resident.
This category covers much of what a small business buys from outside experts: consultants, accountants, lawyers, trainers, advisers. The trainer's invoice above falls here. So does an accountant's fee for preparing your books, if the accountant is in business on their own account.
Contractual fees
Contractual fees are taxed at 3% for residents and 20% for non-residents. Whether a payment is a "contractual fee" or a "professional fee" is a question of what was supplied and under what kind of contract, and it changes the rate for a resident payee. A refit by a building contractor and a fee for professional advice are very different supplies; a payment that mixes the two needs a decision. Ask your adviser to classify your regular suppliers once, and write the answer on each supplier's record.
Non-resident payees
For both categories, a non-resident payee is taxed at 20%. That covers, for example, a foreign consultant who delivers a strategy review by video, or a trainer flown in from abroad. The rate is much higher than the resident one, so establish where the payee is resident before you agree a fee: a supplier who expects to receive the full invoice may not have priced in a fifth of it going to KRA.
KRA's answers on withholding tax cover which payments are subject to it, who must withhold, the remittance window and how withholding certificates reach the payee. They are worth sharing with whoever approves supplier payments.
A worked example, in words
A resident trainer invoices your business for a two-day course. The fee is a training fee, so the rate is 5%.
- Approve the invoice for the full fee.
- Work out 5% of the fee: that is the withholding tax.
- Pay the trainer the fee less the withholding tax.
- By the 20th of the following month, pay the withholding tax to KRA.
- Record the tax as paid, and keep the evidence with the trainer's invoice.
The tax withheld is not lost to the trainer: it is tax paid to KRA on their behalf. That is why the certificate that reaches the payee matters to them, and why suppliers ask for it. How the arrangement looks from the supplier's side is covered in consulting fees paid net of withholding tax.
Remitting by the 20th
Withholding tax is remitted by the 20th of the month after the payment. Generate a payment slip on iTax and note the Payment Registration Number. Pay at a bank, or by M-Pesa to government paybill 222222 with the PRN as the account number. Paybill 572572 is discontinued.
Achekam records a Kenyan tax payment with KRA's own reference and receipt, never generates a payment reference itself, refuses a payment recorded against paybill 572572, and needs a second person to confirm each payment.
Withholding tax and eTIMS
Kenya requires every business to issue electronic tax invoices through eTIMS, but the exclusions from that rule include payments subject to withholding tax. That puts a fee you withhold on among the transactions the eTIMS rule excludes. Keep the supplier's invoice, your withholding calculation and the remittance evidence instead. The other exclusions, and the purchases that do need eTIMS invoices, are in which Kenyan transactions need an eTIMS invoice.
What Achekam computes once rules are approved
Once its rules are approved, Achekam computes Kenyan withholding tax alongside corporation tax, instalment tax, VAT, turnover tax, capital gains tax and stamp duty. Two conditions apply:
- Approval. Every Kenyan tax figure in Achekam's rule book was seeded "under review", and Achekam computes nothing from a figure until an Achekam platform administrator approves it. No user at your business can change a rate.
- Dates. Kenyan rules whose start date the research did not find begin on 1 January 2026 in Achekam, so earlier periods are refused rather than computed.
Until the rules you need are approved, work the withholding by hand, using KRA's current rates, and have someone else check the calculation.
A supplier payment checklist
- Classify each regular supplier: management, professional or training fee, contractual fee, or neither.
- Record whether each supplier is resident in Kenya.
- Check the current rate before the first payment of each year.
- Withhold, pay the net and note the payment date.
- Remit by the 20th of the following month with a PRN.
- Record the payment for a second person to confirm.
- Make sure the supplier receives their withholding certificate.
Dividends and interest follow their own rates; see withholding tax on dividends and interest.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
