Policy Note · When withholding tax falls due on a book entry
Interest and fees to a related party are paid for withholding tax when credited in your books, not when the money moves.
Illustration: Precursor
For withholding tax, the word paid includes credited. Once interest, a royalty or a contractual fee to a non-resident or related party is entered as an expense in the accounts, the withholding obligation arises, although no money has left the country.
A company that waits to withhold until it actually remits will already be late, because the liability ran from the entry. The point commonly surprises taxpayers who accrue group charges and defer payment, and then find the tax was due at the credit.
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Precursor is published by the FinTech Association of Kenya and exercises independent editorial judgement under the Editorial Independence Charter. This article is labelled Precursor Executive Classroom, which marks commercial material. Knowledge on Tax and financial judgement.
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Tax and financial judgement · 4 min read · Paid
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Tax and financial judgement · 4 min read · Paid
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Tax and financial judgement · 4 min read · Paid