The Finance Act, 2026 has introduced a Withholding Tax (WHT) mechanism on payments for the sale of scrap metal.
What Has Changed?
From 1 July 2026, payments for the sale of scrap metal are subject to 1.5% Withholding Tax.
The tax is calculated on the gross amount of the scrap metal payment—not on the profit made by the seller.
Simple Example
Suppose a scrap metal dealer sells scrap metal worth:
KES 100,000
WHT: KES 100,000 × 1.5% = KES 1,500
The seller would receive KES 98,500, while KES 1,500 would be withheld and accounted for to KRA.
Who Needs to Pay Attention?
- Scrap metal dealers
- Businesses buying scrap metal
- Companies disposing of old machinery, equipment, or metal waste
- Accounts and finance teams processing scrap metal payments
- Anyone involved in the collection and sale of scrap metal
The law is designed to improve tax collection in a sector that can be difficult to track, particularly because of the high volume of transactions and informal participants.
Important for Buyers
If your business purchases scrap metal, you may have a WHT obligation. Your systems should therefore be able to:
- Identify scrap metal transactions
- Calculate the 1.5% WHT
- Deduct the tax from the payment
- Account for the tax to KRA
- Issue the relevant WHT certificate where applicable
- Reconcile the deduction in monthly WHT filings
The Big Takeaway
Scrap metal is no longer just a trading transaction—it now comes with a tax collection mechanism at source.
If you buy or sell scrap metal, make sure your accounting and tax processes are updated.
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