Penalty and interest for late PAYE filing and remittance.
Total penalty and interest
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Filing penalty
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Late-payment penalty
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Interest
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Three separate charges, not one
Being late with PAYE in Kenya is not a single fine. It is three distinct charges that stack on top of one another, and understanding the difference is the key to knowing how exposed you are. There is a penalty for filing the return late, a separate penalty for paying the tax late, and then interest that grows for every month the money stays unpaid. An employer can trip one of these without the others. You can file on time but pay late, or pay on time but file late, and the charges that apply will differ accordingly. This calculator adds the three together so you can see the full bill, but it helps to know what each one is doing.
PAYE in Kenya is normally due by the ninth of the month following the deduction. Miss that date and the clock starts. The structure of these charges sits in the Tax Procedures Act and is the stable part to understand. The exact percentages are the figures this calculator applies, and the KRA can and does revise penalty and interest rules, so confirm the current rates with the KRA before treating any figure as final.
What each charge costs, as modelled here
The filing penalty
Filing the PAYE return late attracts a penalty of 25 percent of the tax due or KES 10,000, whichever is higher, as the rate this calculator applies. The KES 10,000 floor matters most for small employers. If your PAYE for the month is modest, the 25 percent figure can fall below KES 10,000, and the floor takes over, so a tiny liability can still cost you KES 10,000 just for filing late.
The late-payment penalty
Paying the tax late adds a one-off penalty of 5 percent of the unpaid tax, as modelled here. This is charged once on the outstanding amount, not every month, so it does not grow with time the way interest does.
The monthly interest
On top of the two penalties, interest accrues at 1 percent of the unpaid tax for each month it remains outstanding, in the version this calculator applies. This is the part that compounds your pain over time. Six months late costs six times as much interest as one month late, so the cost of delay is roughly linear in the months you wait.
A KES 200,000 liability that is three months late
Take an unpaid PAYE liability of KES 200,000, three months late. The filing penalty is 25 percent of KES 200,000, which is KES 50,000, well above the KES 10,000 floor, so the floor does not bite here. The late-payment penalty is 5 percent of KES 200,000, which is KES 10,000. The interest is 1 percent of KES 200,000 for each of the three months, which is KES 6,000. Added together the cost of being late is KES 66,000 on top of the original tax.
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The chart makes the split clear. The filing penalty is the heavyweight at this level of tax, the late-payment penalty is fixed, and the interest slice is what would keep widening if the debt sat unpaid for longer.
A common trap and how to limit the damage
The trap that catches employers is assuming that filing the return without the cash buys them time. It does not remove the late-payment penalty or stop interest, but filing on time does avoid the 25 percent filing penalty, which is usually the largest single charge. So if money is tight, file anyway. Submitting the return on the due date and paying what you can, even partially, almost always works out cheaper than holding everything back, because it strips out the biggest line in the bill. Interest then runs only on the shrinking unpaid balance.
This estimator is for employers, payroll teams, and bookkeepers gauging the cost of a missed PAYE deadline, or weighing whether to apply to the KRA for a waiver of penalties and interest, which is sometimes granted where there was reasonable cause. The figures here are an estimate built on the rates the calculator applies, not a demand notice. Your actual position can differ once the KRA applies its own computation and any partial payments, so always confirm the exact amount and the live rates with the KRA.
Can the KRA waive PAYE penalties and interest?
Yes, the KRA can remit penalties and interest in some circumstances, typically where you can show reasonable cause for the delay, such as a genuine system failure or hardship. You apply for the waiver rather than receiving it automatically, and the principal tax itself is not usually waived. Treat any relief as discretionary, not guaranteed.
Does the interest ever stop growing?
The interest keeps accruing at 1 percent a month, as modelled here, for as long as the tax stays unpaid, so it stops only when you clear the principal. Because it is charged on the unpaid balance, making part payments reduces the base it is calculated on and slows how fast it climbs.