The government introduced a tax amnesty programme through the Finance Act 2023 in line with the revenue mobilisation strategy to encourage tax compliance.
This initiative provided full relief on penalties and interest for the tax period up to December 31, 2022. An amnesty offers taxpayers full or partial relief from outstanding tax liabilities. It provides taxpayers with an opportunity to resolve their debts while promoting fiscal responsibility and strengthening the economy.
The Tax Procedures Act 2024, which took effect on December 27, 2024, extended the tax amnesty programme to include the period up to December 31, 2023. Taxpayers can apply for an amnesty of interest, penalties, or fines on the unpaid tax, and propose a payment plan for the outstanding principal amount, which should be paid not later than June 30, 2025.
Taxpayers with no outstanding principal liabilities up to December 31, 2023, will automatically receive full relief from penalties and interest, as per the guidance issued by the Kenya Revenue Authority (KRA), a qualified taxpayer shall apply for amnesty in the iTax system.
Taxpayers can clear their tax debts using the amnesty programme for all outstanding liabilities on their iTax ledgers.
The taxpayers reconcile their iTax ledgers and identify any amounts worth clearing with the amnesty. It’s also worth noting that only one month remains before the amnesty concludes. Therefore, taxpayers should act promptly and take advantage of the benefits.
Imagine you have a heavy burden that’s been causing you distress for a long time, and the only way to get rid of it is to face it head-on. Now, picture that burden being lifted—what a huge relief right? Even better, this relief grants full amnesty on penalties and interest.
For instance, if a taxpayer has outstanding principal tax, penalties and interest amounting to Sh50 million, Sh2.5 million, and Sh18 million, from January 2021, the amnesty will save them Sh20.5 million on penalties and interest. These tax savings can help a company improve cash flow and support other operations.
According to a press release by the KRA on March 3, 2025, the extension of the amnesty programme has led to the collection of Sh4 billion in principal tax payments and Sh140 million in penalties, interest, and fines. More than 1.9 million taxpayers have benefited.
This collection shows the programme’s wide-reaching impact and showcases the taxman’s dedication to helping with tax compliance. By taking advantage of amnesty, businesses can relieve financial uncertainty and focus on growth and development. Managing tax obligations contributes to a more stable and predictable financial environment.
The extension was only for six months (January to June 2025), which may not be sufficient for some taxpayers with significant tax balances to settle their debts within the stipulated time.
Therefore, with only one month ahead of the deadline, eligible taxpayers must act promptly. This proactive approach ensures compliance with tax regulations, alleviates financial strain, and supports long-term growth and sustainability.
Taxpayers are also encouraged to prioritize tax compliance in respect of the post-amnesty period. Tax compliance has a direct impact on the financial health of a company. Accurate tax reporting ensures that the business pays what is owed to the revenue authority while maximising tax exemptions, credits, and deductions provided for in the Tax Laws.
This not only helps in budgeting but also helps businesses to manage costs and reinvest in growth opportunities. Sound tax planning rooted in compliance paves the way for strategic and informed business decisions.
Transparency in tax reporting also promotes credibility and trust. Further, by adhering to the tax laws, businesses can minimise audit risks and associated costs, allowing them to focus on core operations. Thus, tax compliance is a fundamental aspect of business operations.
Adhering to tax compliance is not just a necessity, it is a strategic advantage that can propel businesses to long-term prosperity.
Don't miss this chance to secure your financial future and benefit from the relief offered by the Tax Amnesty Program.
