KRA in 2025/26: The KSh2.97 Trillion Target, eTIMS Enforcement, and What It All Means for Diaspora Kenyans

The Kenya Revenue Authority entered the final quarter of the 2025/26 financial year with KSh2.038 trillion in the bank against a nine-month target of KSh2.122 trillion. That performance rate of 96.1 per cent, combined with year-on-year growth of 11.4 per cent over the same period in the previous financial year, leaves the authority chasing a full-year target of KSh2.97 trillion that would represent 15.4 per cent growth over the KSh2.572 trillion collected in 2024/25. For Kenyans in the diaspora, the way the authority closes that gap will determine whether the Finance Bill 2026 needs aggressive new measures or whether the existing enforcement tools — particularly the Electronic Tax Invoice Management System known as eTIMS — can carry the load.

The 2025/26 Collection Picture

Domestic taxes — the broad category that includes Pay-As-You-Earn, corporation tax, VAT on domestic transactions, excise duty on locally produced goods, and the rental income tax — contributed KSh1.301 trillion in the first nine months of 2025/26, a 10.4 per cent rise on the same period in the previous year. Customs and Border Control, the unit that handles import VAT, import duty, and excise on imports, was the standout performer at KSh733.7 billion, a 13.3 per cent jump that took it past target at 100.9 per cent performance. Other categories including the Digital Service Tax, the Significant Economic Presence Tax, the Capital Gains Tax, and the Affordable Housing Levy contributed the balance.

The pattern shows the structural rebalancing of the Kenyan tax base. Customs has done well on the back of strong import volumes and tighter post-clearance audits. Domestic taxes have been pushed higher by eTIMS enforcement on VAT and PAYE on the formal sector. The traditional weak point — income tax compliance among the informal sector and the digital economy — is where most of the new enforcement attention is now directed.

eTIMS: The Single Biggest Compliance Lever

The Electronic Tax Invoice Management System is the second-generation real-time invoicing platform that replaced the legacy ETR cash register framework. Every supplier of taxable goods and services in Kenya is required to issue an eTIMS invoice and to transmit it to KRA in real time. The system underpins VAT input claims, expense deductions for income tax, and customs valuation cross-checks. Since the platform became mandatory for the issuance of a Tax Compliance Certificate in October 2024, the share of VAT registered taxpayers actively transmitting through eTIMS has climbed substantially.

The most consequential operational change in 2026 is the integration of eTIMS with mobile money. KRA has worked with Safaricom on a phased rollout in which till numbers and paybill numbers used by registered businesses can be linked to the eTIMS account. The integration allows KRA to reconcile mobile money receipts with invoiced sales and to identify gaps without manual audit. For diaspora-owned shops, restaurants, and rentals operating in Kenya, the practical implication is that informal tills are no longer invisible. The KRA portal at kra.go.ke documents the registration, integration, and the API specifications.

The Significant Economic Presence Tax

Kenya introduced the Digital Service Tax in January 2021 at 1.5 per cent of the gross transaction value for digital services rendered into Kenya by non-resident providers without a permanent establishment. The Finance Act 2024 replaced DST with a Significant Economic Presence Tax, which applies to the same base but at 3 per cent of gross revenue. Non-resident digital service providers must now register with KRA, secure a personal identification number, file monthly, and remit by the twentieth of the month following the supply.

The SEP framework matters for diaspora Kenyans in two ways. First, those operating digital businesses that supply services into Kenya — for instance from a base in London, Dubai, Atlanta, or Toronto — now face a 3 per cent tax on Kenya-sourced revenue. Second, those who consume international platforms while resident in Kenya pay the tax embedded in the platform's local pricing, particularly on streaming, ride-hailing, and digital advertising. The KRA non-resident registration portal is the entry point for SEP compliance.

New Powers Over Non-Residents

The Finance Act 2025 amended the Tax Procedures Act to give KRA expanded power to pursue tax from non-residents. The amendment allows the authority to pursue digital service tax, rental income tax, and employment tax directly from non-resident individuals and entities. For diaspora Kenyans who hold rental properties in Kenya, the new rule reinforces the existing requirement that monthly rental income tax be paid at 7.5 per cent on gross rent above the KSh288,000 annual threshold. The Monthly Rental Income return on iTax is the primary vehicle.

Diaspora landlords who appoint a Kenyan-resident agent to manage the property can settle the obligation through the agent, but the underlying liability remains with the property owner. KRA can now serve agency notices on Kenyan banks and on M-Pesa to ringfence rental receipts where there is suspected non-compliance. Diaspora property owners should ensure their iTax profile is current, their rental property is properly disclosed, and the monthly return is filed on time, even where the rent is below the taxable threshold.

Diaspora-Specific KRA Touchpoints

The KRA Diaspora Information Pack, available on the KRA portal, sets out the main touchpoints. Every Kenyan with a KRA personal identification number must file an annual return on iTax by 30 June following the end of the calendar year, whether or not there is taxable income. The annual return is a nil filing for diaspora taxpayers with no Kenyan-source income, but the nil return is itself mandatory and triggers a penalty if missed. KRA suspended nil-return processing temporarily in early 2026 during a backlog cleanup but reopened the channel by March.

Diaspora taxpayers with Kenyan-source income — typically rental income, dividends from Kenyan listed companies, interest from Kenyan banks above the withholding threshold, or capital gains from Kenyan property sales — must file the full self-assessment return. The Tax Compliance Certificate, which is required for many in-country transactions including land transfer, NTSA logbook transfer, and public tender participation, can be issued online but requires eTIMS compliance for any business taxpayer.

Capital Gains Tax and Property Transfers

Capital Gains Tax is 15 per cent of the net gain on the transfer of property situated in Kenya, payable by the seller. For diaspora Kenyans selling inherited or jointly-owned property, the CGT computation needs to be filed and settled before the title transfer can complete at the Ministry of Lands. The amendment in the Finance Act 2024 increased the rate from 5 to 15 per cent and changed the timing of payment to coincide with the transfer. The Ministry of Lands portal at lands.go.ke and the Ardhisasa platform now require an iTax CGT acknowledgement before the conveyance is signed.

Customs, Imports, and the Bringing of Household Goods

For diaspora Kenyans returning home permanently or relocating, the customs regime under the Returning Resident framework allows for personal effects, including one motor vehicle, to be imported with duty exemptions, subject to conditions on prior residence abroad and on the vehicle's age. The vehicle must be more than twelve months in the returnee's continuous use, must be right-hand drive, and must comply with the standard age limit that restricts the import of vehicles older than eight years from the year of manufacture. The Customs and Border Control portal documents the application process and the supporting evidence.

What Diaspora Households Should Do Through to 30 June 2026

Five practical steps reduce friction in the closing months of the financial year. First, file your annual iTax return on time even if it is a nil return. Second, if you own a rental in Kenya, file every monthly rental income return up to the latest month, even where receipts are below the threshold. Third, if you supply digital services into Kenya from your base abroad, register under the SEP framework and file monthly. Fourth, if you are planning a 2026 property transaction in Kenya, get your TCC current before signing because the validity window has shortened. Fifth, get your eTIMS account active if you run a Kenyan business through which you invoice clients in Kenya.

For 2026/27 planning, expect the Finance Bill 2026 to consolidate rather than expand the headline rates. Treasury has signalled that the priority is enforcement and base-broadening rather than rate increases. The combination of eTIMS, SEP, the agency notice powers, and the deeper data integration with the mobile money networks means that the easier paths to non-compliance are now closed. For diaspora Kenyans, the cleanest approach is to file accurately, pay on time, and treat the KRA touchpoints as routine, rather than waiting for an enforcement notice that arrives faster than it did even two years ago.