The Kenya Revenue Authority (KRA) has reintroduced the Tax Amnesty Programme under the Finance Act, 2026, offering businesses and taxpayers an opportunity to eliminate outstanding tax penalties, interest and fines accumulated up to 31st December 2025.
The six-month programme runs from 1st July 2026 to 31st December 2026 and is expected to provide significant financial relief to thousands of businesses, particularly micro, small and medium-sized enterprises (MSMEs) struggling with historical tax obligations.
The previous two tax amnesty programmes proved highly successful, enabling KRA to recover KSh 80.9 billion in principal tax payments while helping thousands of taxpayers regularize their tax affairs.
What is the KRA Tax Amnesty Programme?
The Tax Amnesty Programme is a government initiative that waives 100% of penalties, interest and fines attached to eligible tax debts, allowing taxpayers to focus on settling the principal tax owed.
The programme is designed to encourage voluntary tax compliance while giving businesses a fresh financial start.
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Key Benefits for Kenyan Businesses and SMEs
For many SMEs, accumulated tax penalties and interest often exceed the original tax owed, making compliance difficult. The reintroduced amnesty provides several important advantages.
1. Automatic Waiver for Businesses That Already Cleared Principal Tax
Businesses and individuals who have fully paid their principal tax liabilities by 31st December 2025 will automatically receive a complete waiver of all related penalties and interest.
No application is required, making the process simple and efficient.
2. Relief from Late Filing Penalties
Businesses that have no outstanding principal tax but face penalties for late filing of returns also stand to benefit.
Once all outstanding tax returns are submitted, KRA will automatically waive the applicable late filing penalties.
This presents an excellent opportunity for SMEs that fell behind on statutory filings to restore full tax compliance.
3. Immediate Waiver Through Full Payment
Businesses with unpaid principal taxes accrued before 2026 can obtain an immediate waiver by paying the outstanding principal amount in full during the amnesty period.
Once the principal tax is settled, the corresponding penalties and interest will be written off.
For businesses with adequate cash flow, this represents one of the fastest ways to clean up historical tax liabilities.
4. Flexible Payment Plans for Cash-Constrained SMEs
Recognizing that many SMEs may not have sufficient cash to pay their taxes in one instalment, KRA has introduced structured payment plans through the iTax system.
Eligible taxpayers can apply for a payment arrangement, provided the principal tax is fully settled by 31st December 2026.
This flexibility allows businesses to manage their cash flow while still qualifying for the tax amnesty.
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Financial Benefits for SMEs
The programme could generate substantial financial benefits for small businesses by:
• Eliminating costly interest and penalties that have accumulated over several years.
• Improving cash flow by reducing the total tax burden.
• Helping businesses regain tax compliance.
• Enabling companies to obtain Tax Compliance Certificates more easily.
• Improving eligibility for government tenders, financing and investment opportunities.
• Reducing legal and enforcement risks associated with unpaid taxes.
• Allowing business owners to focus resources on growth rather than historical tax obligations.
Important Exclusions Businesses Should Know
Despite its broad scope, the amnesty does not apply to every tax liability.
Tax Debts After 1st January 2026 Are Not Covered
Any tax obligations arising from 1st January 2026 onwards remain fully payable.
Businesses must continue meeting their current tax obligations, including principal tax, penalties and interest where applicable.
Businesses with Ongoing Tax Disputes
Businesses currently involved in tax litigation should consider using KRA’s Alternative Dispute Resolution (ADR) framework.
Resolving disputes through ADR may enable taxpayers to agree on principal tax liabilities and subsequently benefit from the amnesty.
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Why SMEs Should Act Early
Waiting until the final weeks of December could create unnecessary delays due to increased demand on KRA systems and support services.
Businesses should review their tax position immediately, determine whether they qualify for the amnesty, and begin the payment or application process as early as possible.
Early action also provides sufficient time to resolve any outstanding return filings or documentation issues before the deadline.
How to Benefit from the Tax Amnesty
Eligible businesses should:
1. Log into the KRA iTax Portal.
2. Review outstanding tax liabilities.
3. Confirm whether principal taxes qualify under the amnesty.
4. Pay eligible principal taxes in full or apply for a structured payment plan.
5. File all outstanding tax returns where applicable.
6. Complete all requirements before 31st December 2026.
A Timely Opportunity for Business Recovery
The reintroduction of the Tax Amnesty Programme reflects the Government’s commitment to supporting voluntary tax compliance while easing financial pressure on Kenyan businesses.
For SMEs that have struggled with mounting tax penalties, this six-month window offers an opportunity to restore compliance, improve financial health and position themselves for future growth. Businesses that act promptly stand to save significant amounts in waived penalties and interest while strengthening their credibility with lenders, investors, suppliers and government agencies.
