Samwel GathiaMost taxpayers registered for a KRA PIN have faced KRA penalties for non-compliance, from basic tax filing to tax payment. The failure to file can be attributed to several factors, such as taxpayers’ lack of awareness that they need to file and failures in the tax filing system, especially towards the deadline when taxpayers rush to file and the iTax system is unavailable. The levied penalties can either be cleared through payment by the taxpayer, by the commissioner (which is conditional), or through a KRA tax amnesty that is the topic of this article.
In summary, the article looks at:
What is a tax Amnesty?
A tax amnesty is a limited-time period offered by a government through an Act of Parliament, e.g the Finance Bill, allowing individuals or businesses to pay and settle outstanding tax liabilities they owe the Kenya Revenue Authority without facing penalties, interest, or legal consequences.
It is a limited period during which taxpayers are given a chance to pay what they owe to the tax man, and the penalties and interest they would have been charged are forfeited or forgiven on condition they pay the outstanding principal tax that belongs to the government.
It is typically aimed at encouraging voluntary tax compliance by offering taxpayers a chance to declare unreported income or settle unpaid taxes under favorable terms.
Legal Background of a Tax Amnesty Program
The tax amnesty was first introduced through the Finance Act, 2023, which amended the Tax Procedures Act by introducing new provisions restraining the tax authorities from recovering interest, penalties or fines.
The Finance Act 2023 introduced the tax amnesty that covered the period up to 31st December 2022, where KRA could not recover penalties, interest and fines that related to prior years up to December 2022, provided taxpayers had cleared principal taxes by June 2024.
In subsequent years, the government has extended the amnesty through the Tax Laws (Amendment) Act 2024 No.21 of 2024 The Tax Procedures (Amendment) Act,2024 , which extended the amnesty period to cover penalties up to 31st December 2023.
The extension in 2024 was through a tax law amendment act and not through a finance act. This came after the June 25th Gen Z protest that was against the Finance Bill 2024, which parliament had initially passed but was later dropped after the president declined to sign it calling for its withdrawal.
The Finance Act is legislation that is enacted by parliament yearly together with the national budget to implement changes in the subsequent government fiscal year. On the other hand, the Tax law (Amendment) Act can be introduced at any point during the year to address matters such as legal gaps or correct policy.
Currently, the Finance Act,2026 also extends the Amnesty program to cover the tax liabilities that fall up to 31st December 2025.
What does the Tax Amnesty Window offer to taxpayers?
Are you a holder of a KRA PIN?
Did you know that whether you are a Kenyan Resident Income Taxpayer or a Foreigner – Non-Resident taxpayer, earning income or not, the tax laws – Tax Procedures Act 2015 Sec24 require a person to file tax returns, failure of which penalties are levied as per Sec 83.
If you have not been filing your tax returns, whether business or personal taxes, the tax amnesty provides an opportunity for you as a taxpayer to take advantage of it to file and pay any due principal tax before 31st December 2026 for you to get a 100% waiver of the penalties and interests.
Highlights of the KRA Tax Amnesty Scheme
The tax amnesty will be applicable :
- Penalties and interest accrued for the period up to 31st Dec 2025.
- The taxpayer has to pay the principal tax in full on or before 31st December 2026
- Where a taxpayer is unable to make a one-off payment for the outstanding principal taxes will be required to apply to the Commissioner for the amnesty and propose a payment plan for any outstanding principal tax, which should be paid by 31st December 2026.
- For taxpayers without principal tax to pay, the amnesty will be automatically be applied. However, in the past program, taxpayers had to prompt the system by generating a one bob payment.
Waiver of Penalties for taxpayers under KRA Audit or Investigation
The current tax amnesty program is extremely fair as it is considering taxpayers who are under tax audit by the tax authorities for income tax and value-added tax, unlike in the previous amnesty programs that did not accommodate taxpayers under tax audit by KRA.
Taxpayers that are under audit or in dispute with the commissioner, and whose matter is being addressed under the Alternative Dispute Resolution (ADR) framework, also qualify to have their penalties and interest waived, provided they have an agreement over the dispute and the principal taxpaid by 31st December 2026.
Having a KRA notice for audit, additional assessment or decision? Get in touch with our team for professional guidance and representation today.
KRA Tax Amnesty on Corporates
The amnesty also applies to corporates and non-individual entities for income tax (corporate tax), Value Added Tax (VAT), and Payroll tax -Pay as you ear (PAYE), marking a big relief for companies that have VAT and PAYE obligation and have accumulated penalties and interest covering those obligations.
If you own a dormant company and you have never filed kra tax returns, this is a big relief not to miss out, as the amnesty will have that burden of penalties forgiven and cleared from the tax ledgers.
Tax Amnesty for Foreigner Non-Resident and Expatriate Working in Kenya
To foreigners who are registered as Non-Resident Foreigner taxpayers, the tax amnesty also serves as a relief for waiving penalties and interest.
A majority of foreigners obtain a KRA PIN for some transactions such as purchasing property or in the process of registering companies in Kenya, but when they go back to their country, they forget about filing Kenyan tax even where they did not have income in Kenya; the law still requires them to file taxes, failure to which penalties are levied and a tax compliance certificate can not be obtained.
Eligibility for Foreign Companies for KRA Tax Amnesty
The tax amnesty is also eligible to foreign companies registered in Kenya as branches or locally domiciled local companies, thereby also giving them a fair chance to get the tax penalties and interest waived provided they have paid principal tax by 31st December 2026.
Even where a foreign company does not have a Kenyan tax identification PIN but has been earning or accruing income from Kenya, they are expected to remit a fair share of the tax through the Significant Economic Presence (SEP) Tax, which was originally collected under the Digital Service Tax (DST) regime.
Voluntary registration for the SEP tax and declaration on undeclared past income would also save foreign companies of the penalties and interest, since the Kenya Revenue Authority has been on a radar check of foreign companies deriving income from Kenya but not paying tax on income derived from Kenya.
The finance Act,2023, amended the Tax Procedures Act to give the Commissioner powers to enter into agreement for Mutual Administrative assistance with recovery of tax and has already issued a notice of reportable jurisdictions.
At Anziano Consultants – an Authorized KRA Tax Agent, we are encouraging foreign entities and foreign entities that have KRA PIN and income obligations and have not regularised their accounts to take this chance and engage our firm to sort their tax for compliance.
Our firm offers tax services tailored to this niche of clientele who may not be conversant with the local regulations and requirements, and we also offer other services beyond taxation.
Conclusion on KRA Tax Amnesty
As the government strives to collect maximum revenue through taxes from taxing its citizens and businesses, both local and foreign, that generate revenue within its jurisdiction its prone to resistance or failure by some taxpayer from tax payment. To address this, tax laws are legislated with punitive measures to address non-compliance.
On the other hand, to encourage taxpayers to come out and declare undeclared income, relieving taxpayers of the tax liability burden from penalties, interest and fines, the Kenyan government has occasionally introduced tax amnesty programs forgiving taxpayers 100% of unpaid penalties and interest.
The current 2026KRA Tax Amnesty runs to 31st December 2026 and provides an opportunity for taxpayers who have tax problems such as returns not filed, a non-updated KRA PIN, registered for the wrong tax obligation or under KRA tax Audit, to have them addressed and take advantage of a waiver of penalties that run back to 2025 for both individual residents and non-residents, as well as income tax and VAT for resident and foreign companies.
To take full advantage of the amnesty, get in touch with our team, and we will go beyond by doing a free tax health check and ensuring your tax records are regularised and that you are a compliant taxpayer. Reach out to us via call or what’s app +254706600875 and Email info@anzianoconsultants.com