KRA Introduces Key Tax Changes and Deadlines Effective 2026

The Kenya Revenue Authority (KRA) has rolled out significant tax reforms under the Finance Act 2026, impacting filing deadlines, VAT, rental income, imports, and tax amnesty conditions.

Earlier Filing Deadline for Individuals

Starting January 1, 2027, individual taxpayers must submit their annual income tax returns by April 30, advancing the previous June deadline. Companies and other entities retain a six-month filing window after their accounting period ends.

Pre-Populated Tax Returns

KRA may now send taxpayers pre-filled returns based on existing data. Taxpayers are advised to carefully review and amend any inaccuracies before submission.

New Rental Income and Gratuity Regulations

• Non-residents earning rental income in Kenya must register under a simplified system and pay taxes monthly by the 20th, unless a resident agent withholds the tax.
• Gratuity tax exemption applies only if the employment contract spans at least three continuous years and the gratuity does not exceed 31% of earnings during that period.

VAT Adjustments for Businesses

• The period to claim VAT refunds on bad debts extends from two to three years.
• VAT is chargeable only on taxable supplies; not all goods or services attract VAT by default.
• Digital payment service fees, including processing and gateway charges, are now subject to VAT.
• VAT exemptions for goods brought in by returning residents align with East African Community rules, with a USD 2,000 threshold.

Import Documentation Requirements

Effective September 1, 2026, importers must obtain and keep export documentation from the exporting country for at least five years. Failure to provide these may affect tax claims related to value, origin, or ownership.

Tax Amnesty Conditions

The Act grants amnesty on penalties, interest, and fines for liabilities up to December 31, 2025, provided the principal tax is settled by December 31, 2026. The principal tax itself remains payable.

Handling KRA System Issues

Where electronic filing or payment systems fail, taxpayers can present explanations and evidence such as screenshots to potentially avoid penalties.

Important Dates to Remember

• September 1, 2026: New import documentation rules take effect.
• December 31, 2026: Deadline to clear principal tax to qualify for amnesty.
• April 30, 2027: Individual taxpayers file 2026 returns.

Taxpayers are encouraged to identify applicable changes early, prepare accordingly, and maintain thorough records to comply with the new regulations.