By Benadeta Mwaura - Reporter
Kenya, July 1, 2026 - The Kenya Revenue Authority (KRA) has rolled out a revamped tax amnesty programme under the Finance Act, 2026, offering taxpayers an opportunity to clear historical tax penalties and interest while introducing new timelines for filing annual income tax returns.
The reforms, which came into effect following the enactment of the Finance Act 2026, are aimed at encouraging voluntary tax compliance, improving revenue collection, and reducing the backlog of unresolved tax disputes.
Under the new framework, taxpayers with outstanding tax liabilities that arose on or before December 31, 2025, can benefit from a waiver of accumulated penalties, interest, and fines, provided they fully settle the principal tax owed by December 31, 2026.
Unlike previous amnesty programmes, the new framework requires taxpayers to pay 100% of the principal tax before qualifying for the automatic waiver of penalties and interest.
Taxpayers who are unable to make a lump-sum payment can instead apply for an Automated Payment Plan (APP) through KRA's iTax portal. Under the arrangement, taxpayers will be required to sign a commitment agreement and adhere to an approved repayment schedule to remain eligible for the amnesty.
The move is expected to benefit thousands of individuals and businesses that have accumulated penalties over the years, particularly small and medium-sized enterprises that struggled to meet their tax obligations during periods of economic hardship.
Besides the tax amnesty, the Finance Act has also introduced significant changes to annual tax return filing deadlines.
Taxpayers filing nil returns will now be required to submit them within one month after the end of the year of income.
Meanwhile, individuals whose income is fully taxed at source, including employees under the Pay As You Earn (PAYE) system, will now have four months after the end of the year of income to file their annual returns, replacing the previous filing calendar that culminated in the June rush.
The revised timelines are intended to provide KRA with more time to verify tax information while easing congestion on the iTax platform during peak filing periods.
The Finance Act also strengthens compliance requirements through expanded use of the Electronic Tax Invoice Management System (eTIMS).
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Businesses will now be required to support deductible expenses with valid electronic tax invoices generated through eTIMS. Expenses that cannot be verified electronically may be disallowed during tax assessments, potentially increasing taxable income and the amount of principal tax payable.
Tax experts say the requirement is part of KRA's broader strategy to digitize tax administration, improve transparency, and reduce tax evasion.
The introduction of the new amnesty comes shortly after the June 30 income tax filing deadline, during which KRA maintained that no extension would be granted despite increased traffic on the iTax system.
Taxpayers who missed the filing deadline remain liable for statutory late-filing penalties. However, those who regularize their tax affairs under the new amnesty framework may subsequently qualify for the waiver of eligible penalties and interest, subject to the conditions set out in the Finance Act.
The Treasury expects the reforms to improve voluntary compliance while enabling KRA to recover outstanding principal taxes without engaging in lengthy enforcement actions.
It is important to note that the programme provides a fresh opportunity for taxpayers to clean up their tax records before KRA intensifies compliance audits under its expanding digital tax administration framework.
With the amnesty running until December 31, 2026, tax professionals are advising individuals and businesses to review their tax status early, settle eligible principal taxes, or enroll in approved payment plans to avoid missing the one-time relief window.