The Kenya Revenue Authority (KRA) has written off debts of about Sh140 billion in accumulated interest and penalties for companies and individuals under the second phase of the partial tax pardon, the agency announced on Monday.
The waiver has been extended to more than 1.9 million taxpayers who have cleared principal taxes for the period up to December 2023, the KRA says. The beneficiaries have been roped into the tax net.
The taxman said it has collected Sh4 billion in principal taxes from businesses and individuals who have been forgiven under the programme.
Taxpayers who had no principal arrears at the end of December 2023 automatically qualified to have the accumulated interests and fines waived under the programme, which re-opened on December 27, 2024 and closes on June 30, 2025.
Those with arrears on principal debts have the option of paying it off in lump sum or entering into a payment plan with the taxman upon application under the electronic tax system, iTax.
The applicants are required to clear the principal debts by June 30 to have accumulated interest and fines written off.
“Taxpayers involved in ongoing tax disputes are encouraged to resolve the disputes through the Alternative Dispute Resolution to ensure a swift resolution before the amnesty deadline,” said Rispah Simiyu, hitherto the commissioner for Domestic Taxes, which has been renamed Large and Medium Taxpayers department in a statement.
“This initiative is a part of KRA’s broader efforts to foster voluntary compliance and provide relief to taxpayers burdened by past debts. It offers a unique chance to settle tax matters on favourable terms and to move forward on a clean slate.”
The Ruto administration under the Finance Act 2023 initially offered the pardon on accrued penalties and interest which applied automatically for taxpayers who have cleared all the debts owed for the period ended December 2022, while those with arrears were required to apply.
Nearly 3.12 million taxpayers successfully applied for the first phase of the partial tax pardon programme which ran for 10 months through June 2024.
The KRA said it wrote off Sh507.7 billion in accumulated penalties and interest for taxpayers who paid principal arrears for the period up to December 2022.
Business groups and other stakeholders, however, successfully lobbied the Treasury and the lawmakers to extend the programme to encourage more taxpayers to regularise their tax status and broaden the tax base, helping the KRA raise collections.
Applying for amnesty and failing to settle the principal debts by June 2025 could prompt the KRA to institute enforcement measures in a bid to recover the amount owed.
Section 42 of the Tax Procedures Act empowers the KRA to deactivate PINs, issue travel bans, collect cash due from the taxpayer’s banker, and prosecute if the taxman has reasonable grounds that he will default.
Miriam Macharia, lead expert on tax amnesty in the Domestic Taxers Department, had in the past said the enforcement will be applied if the taxpayers do not honour a repayment plan within the 10-month window and cannot be reached through the contacts provided.
“If you feel that something might happen that bars you from honouring the plan, you need to make this plan with your debt manager so that they can give you another date so that you don’t default,” Ms Macharia had warned. “So when you sign the amnesty agreement, you sign a contract to honour. The danger of enforcement after you default is that we usually collect all the money we find so that you stop enjoying the luxury of time of having a payment.”
