Important Provisions for Businesses

1.       Tax Amnesty

On Interest and penalties accrued up to 31st December 2025

The bill proposes to amend Section 37E of the Tax Procedure Act to introduce an amnesty on interest and penalties accrued up to December 31, 2025, provided the principal tax is paid in full.

2.       Non-Compliance with eTIMS

The bill proposes to amend Section 86 of the Tax Procedures Act to introduce stricter penalties for failure to comply with electronic tax requirements.

If the Commissioner is not satisfied with the reasons provided, the taxpayer would be liable to pay the higher of:

(a) two times the value of the tax due,

(b) one hundred thousand shillings, or

(c) in the case of an individual, ten thousand shillings.

3.       Issuance of Agency Notices During Appeals

The bill proposes to amend Section 42 of the Tax Procedures Act by deleting paragraph (e) of Section 42(14).

This would remove the protection that currently prevents the Taxman from issuing agency notices when a taxpayer has appealed an assessment, thereby empowering KRA to issue notices despite ongoing appeals.

4.       Shorter Tax Return Filing Windows

The bill proposes to amend Sections 52 and 52B of the Income Tax Act to reduce the annual tax return filing deadline from six to four months after the financial year ends.

Businesses with zero tax liability would have just one month to file. This change would take effect on July 1, 2026.