KRA Tax Amnesty 2026 in Kenya: How the December Deadline Works, What Penalties Are Waived and How to Apply on iTax

Kenya's most generous tax-debt clean-up programme since 2004 has been extended through 2026. Under the amendment introduced through the Finance Bill 2026 to section 37E of the Tax Procedures Act, the Kenya Revenue Authority will continue to waive penalties and interest accumulated up to 31 December 2025, provided the underlying principal tax is fully settled by 31 December 2026. By the end of the first phase of the programme in mid-2025, the Authority reported that it had waived Sh140 billion in penalties and interest for more than 3 million qualifying taxpayers. The 2026 window is a final opportunity for individuals and businesses with legacy tax debts to come clean before the amnesty closes for good.

The Statutory Basis

The amnesty was first introduced in the Finance Act, 2023, which inserted section 37E into the Tax Procedures Act, 2015. Under that section, where a taxpayer has paid the principal tax due before 1 January 2026, all interest and penalties associated with that principal liability are automatically waived. The Finance Bill 2026 extends the deadline by 12 months, making the cut-off for principal tax payment 31 December 2026. Principal tax accumulated from 1 January 2026 onwards is not covered by the waiver; the amnesty applies only to interest and penalties on the pre-2026 debt.

Who Qualifies and Who Does Not

The amnesty is available to all taxpayers, whether individuals, partnerships, companies, trusts or non-resident persons with Kenyan tax obligations. It covers Pay As You Earn, Value Added Tax, Corporation Tax, Withholding Tax, Capital Gains Tax, Excise Duty, Monthly Rental Income Tax, Turnover Tax, Digital Service Tax and Significant Economic Presence Tax. It also covers Stamp Duty assessments collected by KRA on behalf of the Land Registries.

The amnesty does not cover ongoing fraud cases under the Tax Procedures Act, debts subject to a pending criminal proceeding, or amounts that have been the subject of a binding ruling by a court or by the Tax Appeals Tribunal that has not been vacated. Taxpayers under audit may apply for the amnesty for periods not covered by the audit; periods within the audit scope are addressed once the audit concludes and the assessment becomes final.

How the Waiver Operates in Practice

Where a taxpayer has principal tax outstanding for a pre-2026 period, the amnesty operates on a "pay principal, waiver applies automatically" basis. The taxpayer is not required to file a separate waiver application for the interest and penalties: once the principal is paid in full, the Authority's system writes off the interest and penalties associated with that liability. For taxpayers who already have no principal outstanding and only interest and penalties on the iTax ledger, the waiver is automatic and the ledger should clear without further action.

For larger debts, taxpayers may apply to KRA for a payment plan that spreads the principal over the period to 31 December 2026. The Authority has historically accepted payment plans of up to 18 months for material debts on a case-by-case basis. The plan must be in writing, must specify the monthly amounts and dates, and must include a commitment letter under section 37E confirming that current obligations will continue to be met during the plan period.

Important Conditions and Pitfalls

Three conditions trip up taxpayers most often. The first is partial payment: paying part of the principal does not unlock a partial waiver of interest and penalties; the principal must be settled in full. The second is the accumulation of new tax debt during the payment period; new arrears can disqualify a taxpayer from the amnesty even where the historical principal has been cleared. The third is the once-only nature of the waiver under the current programme; a taxpayer who fails to take up the amnesty before 31 December 2026 is unlikely to receive a similar waiver in the foreseeable future.

Step-by-Step on iTax

The mechanics on iTax are straightforward. The taxpayer logs in at itax.kra.go.ke with their PIN and password and navigates to the "Debt and Enforcement" or "Tax Ledger" tab depending on the obligation. Each outstanding period is displayed with the principal, interest, penalty and total. The taxpayer generates a Payment Registration Number (PRN) for the principal amount, which produces a payment slip. The slip is paid via M-Pesa Paybill 222222 (Account Number = PRN), via RTGS through any commercial bank, or via debit or credit card through the iTax portal. Once the payment is reconciled (usually within 24 hours), the interest and penalties on that period are written off.

For taxpayers seeking to set up a payment plan, the application is made through a written letter addressed to the Commissioner Domestic Taxes or Commissioner Customs and Border Control, depending on the tax type, attached to the iTax ticket under "Debt Management". The plan must be acknowledged by KRA before payments begin.

What It Means for Diaspora Landlords

Many diaspora Kenyans who own rental properties have unfiled Monthly Rental Income Tax (MRI) returns going back several years. MRI was introduced in 2016 at 10 per cent of gross rental income for landlords earning between Sh288,000 and Sh15 million a year, with a recent revision to the bracket structure under the Finance Act, 2025. Diaspora landlords with no Kenyan PIN should first register for a non-resident PIN, file the back returns, and then pay the principal MRI plus any current obligations. Once the principal is paid, the interest and penalties for the pre-2026 periods will be waived. For some landlords this represents tens of thousands of shillings in waived charges.

Diaspora landlords also need to confirm their treatment of withholding tax on rent. From 2024, certain large tenants are appointed as withholding agents required to deduct 7.5 per cent of rent at source. Where a tenant has been withholding, the landlord may have an MRI liability that is partially or fully covered by the withholding credit. The iTax ledger will show this correctly only if the tenant's PIN matches the property and the withholding certificate has been issued.

What It Means for SMEs and Companies

Small and medium businesses with VAT, PAYE or Corporation Tax arrears from the pandemic-era and post-pandemic period are the largest demographic taking advantage of the amnesty. For SMEs, the immediate benefit is the freeing up of bank credit lines: a current Tax Compliance Certificate is required for many tender applications, government payments and bank facility renewals. For companies in liquidation or insolvency, the amnesty can materially reduce the size of KRA's claim in the creditors' meeting and improve the chances of a workable restructuring.

Companies should reconcile their iTax ledger against their internal accounting records before paying. iTax balances can lag actual obligations by a return cycle, especially for VAT, and discrepancies should be raised with the relationship manager at the appropriate Domestic Taxes office before the PRN is generated.

Tax Compliance Certificate After Amnesty

A Tax Compliance Certificate is issued by KRA online via iTax for taxpayers who are fully up to date on filing and payment for the past three years. After the amnesty payment is processed, the taxpayer can apply for a new TCC and should receive it within 24 to 48 hours. The TCC is valid for 12 months and can be downloaded as a PDF for use in tenders, immigration applications, eVisa renewals and bank facility documentation.

What to Do Before 31 December 2026

The single most important action is to log in to iTax and review the tax ledger now rather than at year-end. Year-end queues for clarifications, payment plan approvals and bank reconciliations are long, and many taxpayers who waited until November or December 2025 missed the first phase deadline despite having intended to take it up. The optimal window is March to October 2026: it allows time for reconciliations, payment plans where required, and the issuance of a fresh Tax Compliance Certificate.

For authoritative guidance, the Kenya Revenue Authority publishes the amnesty FAQs and public notices, the iTax portal handles the filings and payments, and the Kenya Law repository hosts the consolidated Tax Procedures Act with the amnesty provisions.

A Once-in-a-Decade Window

Kenya's last comparable tax amnesty closed in 2004 and was followed by 19 years without a similar broad-based waiver. The 2024-2026 programme is therefore best understood as a once-in-a-decade opportunity rather than a recurring feature of the tax calendar. Taxpayers who use it well will clear legacy ledgers, restore compliance, and avoid the much higher cost of enforced collection through agency notices, bank account freezes or property attachment. Taxpayers who wait may find that the programme is not renewed and that the interest and penalty load on legacy debt makes the eventual settlement materially harder.