Why Withholding Tax Is NOT the End of Your Tax Story – A Simple Guide Before the June 30 Deadline

As the June 30 tax filing deadline approaches, the Kenya Revenue Authority (KRA) has stepped in to explain something many Kenyans get wrong every year: withholding tax is not always the final tax you owe. Let’s explain this in the simplest way possible.

Imagine you are in school and your teacher tells you that your school fees for the term is KES 10,000. Your parent pays KES 500 in advance. That KES 500 helps, but it does not mean the entire school fee has been cleared. You still owe the remaining balance.

That is exactly how withholding tax works in many cases.

When you provide a service — maybe you are a consultant, digital creator, supplier, marketer, engineer, lawyer, or freelancer — the person paying you may deduct 5% of your payment and send it directly to KRA.

That 5% is called withholding tax (WHT). Many people think that because money has already been deducted, their tax work is finished. But in most cases, that 5% is just a small advance payment.

It is not the full bill.

KRA has clarified that withholding tax is only considered “final” for certain types of income. For example, some dividends, specific interest income, some payments to non-residents, and certain betting winnings may not require further tax once withholding has been deducted.

In those special cases, what is deducted is the end of the story.

But for most professionals and business owners in Kenya, it is only the beginning.

Let’s say you earned KES 1,000,000 in a year from consultancy work. If 5% was deducted every time you were paid, you might think everything is sorted. But when you calculate your annual income tax based on your full earnings, your real tax rate could be much higher than 5%.

That means you may still owe additional tax when filing your returns.

This is where many people get shocked.

They log into iTax thinking they are compliant, only to discover there is a balance due. And if that balance is not paid on time, penalties and interest start accumulating.

So what should you do?

First, always collect your withholding tax certificates. These certificates are proof that tax was deducted and paid to KRA on your behalf. Without them, you cannot claim credit for the tax already paid.

Second, when filing your annual return, declare all your income — not just what you received after deductions. You must report the full amount you earned.

Third, claim the withholding tax as a credit. This reduces what you owe. If the total tax calculated is higher than what was withheld, you pay the difference. If it is lower, you may have a credit balance.

Think of it like settling a bill at a restaurant. The 5% withholding tax is like paying a small deposit before your meal. At the end, you must check the full bill and settle whatever remains.

This is especially important for entrepreneurs, freelancers, digital creators, and SMEs who operate in Kenya’s fast-growing service economy.

Many small businesses struggle not because they do not earn money, but because they misunderstand compliance rules and face unexpected tax obligations later.

The lesson here is simple: withholding tax is often a partial payment, not the final payment.

As June 30 approaches, do not assume you are safe because tax was deducted from your payments. Log into your iTax account. Review your income. Confirm your withholding certificates. Reconcile your numbers. File correctly.

Tax compliance is not about fear. It is about understanding the rules and staying ahead of them.

In business, clarity protects cash flow. And in Kenya’s increasingly digital tax system, knowledge is not optional — it is power.

At Soko Directory, we believe informed entrepreneurs make stronger financial decisions. This filing season, do not treat withholding tax as the end of the story. Treat it as the beginning of responsible, smart compliance.

Read Also: What Is Withholding Tax? Here Is Everything You Should Know