The amendments have repealed the interpretation of qualifying-interest. Any interest receivable by a resident individual in any year of income is now qualifying interest provided that;
(a) interest earned on an account held jointly by a husband and wife shall be deemed to be qualifying interest; and
(b) in the case of housing bonds, the aggregate amount of interest shall not exceed three hundred thousand shillings
That is interest receivable of up to Kshs. 300,000 from housing bonds is subject to 10% withholding tax which is final tax.
“qualifying interest” means the aggregate interest, discount or original issue discount receivable by a resident individual in any year of income.
Interest earned from below listed financial institutions is also considered qualifying interest and tax deducted at source is final.
(i) a bank or financial institution licensed under the Banking Act (Cap.488); or
(ii) a building society registered under the Building Societies Act (Cap. 489) which in the case of housing bonds has been approved by the Minister for the purposes of this Act; or
(iii) the Central Bank of Kenya
Withholding tax on dividends payable to non-resident is now 15% an increase from 10%. The rate applicable to citizens of the East African Community Partner States in respect of dividend shall be five per cent of the gross sum payable.
The Tax Law adds to the list; a payment made to a non-resident person, not having a permanent establishment in Kenya relating to sales promotion, marketing, advertising services, and transportation of goods (excluding air and shipping transport services – withhold tax at the rate of 20% of gross amount. Exemption is granted for transportation of goods for East African Community citizens. This is in addition to other payments subject to withholding tax shown in appendix I.