Non-Cash Benefits in Kenya

All non cash benefits are taxed at the higher of actual cost to the employer and the market value e.g. water, electricity, domestic help, watchmen, radio alarms etc.

• Powers of the Commissioner to prescribe the value of the benefits were removed. wef 12 Jun 2003. (s.5(5))


• Tax exempt limit. (s.5(2)(b))
  Non-cash benefits that in aggregate do not exceed KShs 36,000 per annum are not taxable

1. Commissioners Prescribed Rates
   However, where the cost or the fair market value of a benefit cannot be determined the Commissioner may prescribe the value such as -
   
   
   1. Furniture
      Provision of furniture value of benefit is 1% of the cost of furniture to employer.
   2. Telephone
      Telephone (landline and mobile phone) value of benefit 30% of bills.
   3. Electricity (communal or generator) Kshs. 1500 per month (agricultural employees Kshs. 900).
   4. Water (communal or borehole) Kshs. 500 per month (agricultural employees Kshs. 200).
2. Fringe Benefit Tax (payable @30% by employer) (s.5(2A))
   Where an individual is
   
   
   
   1. a director or
   2. an employee or
   3. is a relative of a director or an employee
   and has received a loan , after 11/06/1998, including a loan from an unregistered pension or provident fund by virtue of his position as director, employee or related to the two, he shall be deemed to have received a benefit equal to the the difference between the interest at prescribed (market lending rates) rate and the actual interest paid on the loan.
   
   "market lending rates" means the average 91-day treasury bill rate of interest as prescribed by the commissioner for the previous quarter.
   
   This provision shall continue to apply for as long as the loan remains unpaid even after termination of employment. This tax is paid monthly by the 20th.
3. Car Benefit (s.5(2B))
   Where an employee is provided with a motor vehicle by his employer he shall be deemed to have received a benefit in that year of income equal to
   
   
   • the higher of
     
     
     1. the prescribed rate of 2% of the initial cost to the employer
     2. the Commissioner's prescribed rates.
   • Commissioner may determine a lower rate of benefit upon proof of business use. (effective 01/01/2008)
   • Where the car is leased or hired the taxable benefit is the lease or hire charge. (effective 16/06/2006)