The Kenya Revenue Authority (KRA) is responsible for administering and enforcing the tax laws of Kenya, including the provisions relating to taxation of income derived by non-resident persons and the application of Double Tax Agreements (DTAs) entered into by Kenya.

In certain circumstances, tax may be deducted and remitted to KRA in respect of payments made to a non-resident person, but it may subsequently be established that the tax was deducted in error. This may arise, for example, where the applicable DTA allocates the taxing rights to the other Contracting State, where the non-resident does not have a Permanent Establishment (PE) in Kenya and a PE is required for Kenya to exercise taxing rights, or where the income is otherwise exempt from taxation in Kenya under the applicable DTA. Such circumstances may result in a refund becoming due after the tax has already been withheld and remitted to KRA.

These Guidelines have therefore been developed to provide taxpayers who are non-residents and withholding agents with a clear, transparent and standardised procedure for making and processing refund claims arising from DTAs and tax paid in error.

The Guidelines are intended to provide certainty on the requirements, documentation, responsibilities and timelines applicable to such refund claims and to minimise errors arising from the incorrect application of DTAs.

The purpose of these Guidelines is to provide a clear procedure for the submission, consideration and settlement of refund claims arising where tax has:

1. been deducted and remitted to KRA but Kenya subsequently determines that it did not have taxing rights under the applicable DTA; or
2. otherwise been paid in error by or on behalf of a non-resident person.

The Guidelines seek to:

1. Promote consistent and transparent processing of DTA-related refund claims.
2. Provide clarity to non-resident persons and withholding agents on the refund process.
3. Ensure that taxes paid in error are restored to the rightful person.
4. Safeguard Government revenue by preventing duplicate refunds or unintended tax benefits.
5. Promote correct application of DTAs at the point of withholding.
6. Reduce the administrative burden associated with refund claims through clear documentation and procedures.

These Guidelines apply to refund claims made by non-resident persons in circumstances where tax has been deducted and remitted to KRA and it is subsequently established that:

1. Kenya does not have taxing rights under an applicable DTA.
2. The non-resident person - does not have a Permanent Establishment in Kenya where the relevant DTA requires the existence of a PE before Kenya may exercise taxing rights;
3. Withholding tax was deducted on passive income, including dividends, interest, royalties or fees for technical services, contrary to the provisions of an applicable DTA; or
4. Tax was otherwise deducted or paid in error under applicable tax law.

These Guidelines apply to non-resident persons, withholding agents and other persons involved in the submission and settlement of such claims.

The processing of refund claims under these Guidelines shall be undertaken in accordance with:

1. The Tax Procedures Act;
2. The Income Tax Act;
3. Applicable Double Tax Agreements entered into and in force in Kenya (https://www.treasury.go.ke/double-taxation-agreements);
4. The Privileges and Immunities Act, where applicable; and
5. Any other applicable tax legislation and KRA administrative procedures.

Where the provisions of an applicable DTA allocate taxing rights differently from domestic legislation, the relevant treaty provisions shall be considered in determining Kenya's taxing rights.

Refund claims under these Guidelines shall be guided by the following principles:

1. Taxing Rights-Kenya shall only tax income where it has taxing rights under the applicable domestic law and the relevant DTA.
2. Correct Application of DTAs-Taxpayers and withholding agents are expected to apply the provisions of an applicable DTA correctly before withholding tax.
3. Verification-All refund claims shall be subject to verification by KRA and, where necessary, an audit.
4. No Double Benefit-A taxpayer shall not receive a refund or tax benefit more than once in respect of the same tax.
5. Restoration of Tax-Where tax is established to have been paid in error, the tax shall be restored to the rightful party in accordance with the applicable law and procedures.
6. Transparency-KRA shall communicate the outcome of the refund claim to the claimant in accordance with the applicable procedures and timelines.

A refund claim under these Guidelines may be made by a non-resident person where:

1. The claimant is resident in a country with which Kenya has an applicable DTA, where the claim is based on treaty provisions;
2. The claimant satisfies the requirements for claiming benefits under the relevant DTA;
3. Tax has been deducted and remitted to KRA;
4. It is subsequently established that Kenya did not have the right to tax the relevant income or that the tax was otherwise paid in error;
5. The tax claimed has not previously been refunded, utilised or otherwise settled;
6. The tax is not the subject of a pending dispute before a court, tribunal or other competent authority; and
7. The claimant has submitted all required supporting documentation

A claimant shall submit a written refund application letter to KRA accompanied by sufficient documentation to support the claim.

The following documents shall be submitted:

1. A written application letter for refund giving an explanation and justification for the refund claim, including the specific DTA provision relied upon.
2. Valid Tax Residency Certificate issued by the tax authority of the claimant's country of residence.
3. Relevant provisions under the DTA in effect.
4. Contracts or agreements relating to the income or transaction.
5. Invoices or other documents supporting the payment.
6. Withholding Tax Certificate(s).
7. Proof of payment of the income to the non-resident person.
8. Evidence of the tax deducted and remitted to KRA.
9. Details of the Kenyan withholding agent.
10. Any other documentation that KRA may reasonably require to determine the claim.

Before making an application, a claimant shall ensure that they have all the items listed in the checklist (Appendix II).

A non-resident claimant shall submit a written application letter claiming for refund to the Deputy Commissioner, Debt, Refunds and Ledger Management Division Kenya Revenue Authority.

The application should clearly state:

1. Name and address of the claimant;
2. Country of residence;
3. Details of the Kenyan withholding agent;
4. Nature and amount of income received;
5. Amount of tax deducted;
6. Date the tax was deducted and remitted;
7. Relevant DTA that is in force and article relied upon;
8. Reason why the tax is considered to have been paid in error; and
9. Amount being claimed as a refund.
10. The application shall be accompanied by the supporting documents specified in Section 7 of these Guidelines and a claimant declaration (Appendix I)

1. KRA shall review the application to ensure it contains the required information and supporting documentation within five (5) days of receipt of the application.
2. Where some information or documentation are missing, KRA shall notify the claimant and request submission of the outstanding information.

• The claimant shall be expected to provide the requested information within seven (7) days of the notification or within such other period as may be communicated by KRA failure to which KRA shall make its decision based on the provided documents.

1. Subject to the availability and completeness of information, KRA shall undertake a technical review within thirty (30) days to determine whether the refund claim is valid.
2. KRA may undertake an audit where the nature or circumstances of the claim require further examination.
3. The claimant shall be notified of the outcome of the refund claim following completion of the review and approval process and where applicable, the reasons for the decision.

• Where the claimant has been notified that the refund has been approved for processing, they shall be required to inform the withholding agents to make a formal application in iTax system to cancel the withholding certificate.

1. Where KRA approves a refund claim, the withholding agent, being the Kenyan person who deducted and remitted the withholding tax, shall undertake the system-related steps required to reverse the withholding transaction.
2. The withholding agent shall be notified by the claimant to initiate the cancellation of the relevant Withholding Tax Certificate(s) through iTax system together with the relevant KRA approval/supporting documentation.
3. Where the cancellation is approved:

   a) the relevant Withholding Tax Certificate shall be cancelled; and

   b) a Withholding Adjustment Voucher (WAV) shall be generated.

4. The Withholding Adjustment Voucher shall be utilised by the withholding agent to offset the restored credit against eligible outstanding or future withholding tax liabilities.
5. The withholding agent shall refund to the non-resident claimant the amount that was previously withheld erroneously.
6. Where the withholding agent is dormant, winding up or otherwise unable to utilise the restored credit, the withholding agent may request their cancellation in favour of a cash settlement.
7. The withholding agent and the non-resident claimant shall retain documentary evidence of the settlement.

A refund claim may be rejected where:

1. Kenya is determined to have taxing rights over the income;
2. The claimant does not satisfy the conditions for treaty benefits;
3. The claimant fails to provide information reasonably required by KRA to determine the claim.
4. The tax claimed has already been refunded, credited or otherwise settled;
5. The tax is subject to an ongoing dispute before a court, tribunal or other competent authority, where applicable; or
6. The claim is otherwise contrary to applicable tax law.

The claimant shall:

1. Provide complete and accurate information;
2. Provide valid supporting documentation;
3. Provide a valid Tax Residency Certificate where required;
4. Correctly identify and justify the DTA provision relied upon;
5. Respond promptly to requests for additional information;
6. Disclose any other refund, credit or tax relief received in respect of the same tax;
7. Notify KRA of any material change affecting the claim; and
8. Cooperate with KRA during the verification or audit process.
9. A claimant shall not knowingly submit duplicate or unsupported refund claims.
10. Notify the withholding agent to initiate the claim in the iTax system upon approval by KRA.

Taxpayers and withholding agents are expected to correctly apply the relevant provisions of an applicable DTA when determining the tax treatment of payments made to non-resident persons. Applying the relevant DTA provisions correctly at the point of payment will help ensure that tax is withheld only where applicable, thereby minimising erroneous withholding and the need for subsequent refund claims.

Before withholding tax from the withholdee, withholding agents should:

1. Confirm the tax residence of the recipient.
2. Determine whether Kenya has taxing rights under domestic law.
3. Identify whether an applicable DTA is in force.
4. Determine the relevant DTA article governing the income.
5. Confirm whether the conditions for treaty relief are satisfied.
6. Obtain and retain the necessary supporting documentation.
7. Seek clarification from KRA where there is uncertainty regarding the application of a DTA.
8. Ensure that withholding tax is correctly applied in accordance with Kenyan tax law and applicable DTAs;
9. Maintain proper records of payments made to non-resident persons;
10. Provide supporting information required by KRA;
11. Initiate cancellation of the relevant Withholding Tax Certificate(s) for erroneously withheld taxes following approval of a refund;
12. Cooperate with KRA during verification or audit; and
13. Refund the approved amount to the non-resident claimant where required under the approved refund process.

A claimant or Withholding agent may contact KRA for clarification on the status or requirements of a refund claim through;

Claimant are encouraged to ensure that, their contact details are clearly provided in the refund application to facilitate timely communication.