What happened

The Kenya Revenue Authority (KRA) has recently released a clarification on the rules governing the 2026 tax amnesty programme. In the statement, KRA confirmed that while the amnesty will allow eligible taxpayers to settle outstanding liabilities at reduced rates, some tax obligations will remain excluded from the relief. The guidance was published on the official KRA portal and echoed by the news outlet peopledaily.digital. By spelling out which liabilities are not covered, the authority hopes to reduce confusion that characterised earlier amnesty rounds. Taxpayers are now urged to review the detailed list of excluded obligations before deciding whether to participate.

Context and background

The tax amnesty concept was introduced in Kenya as a voluntary compliance tool, allowing defaulters to regularise their tax positions without facing the full penalty and interest regime. The first major amnesty was launched in 2019, followed by a second round in 2022, each aimed at widening the tax base and boosting revenue ahead of the national budget cycle. Over those periods, KRA reported that thousands of SMEs and large corporates took advantage of the reduced rates, contributing significantly to the Treasury’s cash flow.

In the lead‑up to the 2026 amnesty, the government announced a broader fiscal consolidation plan, signalling that the upcoming relief would be more targeted. Stakeholders, including the Federation of Kenya Employers and the Kenya Association of Manufacturers, raised concerns that ambiguous wording could lead to disputes over what qualifies for the amnesty. Responding to these pressures, KRA issued the current clarification to delineate the scope of the programme, specifying that certain categories—such as customs duties on imported goods and excise taxes on specific commodities—are not part of the amnesty, although the exact list was not disclosed in the brief summary.

Historically, KRA has used amnesty periods to address chronic compliance gaps, especially in sectors where informal trading is prevalent. The authority’s decision to exclude particular obligations this time reflects a strategic shift: by leaving high‑impact revenue streams untouched, the government aims to protect fiscal stability while still offering a concession to those with cash‑flow challenges. The clarification also aligns with the Treasury’s medium‑term revenue forecast, which projects a modest increase in collection efficiency for the 2026 fiscal year.

Compared with what is normal

Previous amnesty rounds in Kenya were relatively inclusive, covering most forms of direct and indirect taxes, including corporate income tax, value‑added tax (VAT), and withholding tax. The 2022 amnesty, for instance, allowed businesses to settle both income tax arrears and certain customs liabilities at a reduced rate of 50 % of the assessed amount. In contrast, the 2026 clarification signals a narrower approach, keeping some obligations—particularly those linked to import duties and excise—outside the relief envelope. This departure from past practice is intended to safeguard revenue from sectors that have historically contributed a large share of tax receipts.

• 2022 amnesty: covered income tax, VAT, withholding tax, and most customs duties.
• 2026 amnesty (as clarified): excludes specific customs duties and excise taxes.
• Typical compliance pattern: SMEs often delay VAT filings; the new rules may push them to settle before the deadline to avoid exclusion.

Why it matters

For Kenyan SMEs, the clarification has immediate practical implications. Companies that were planning to regularise outstanding customs duties under the amnesty now face the prospect of paying full penalties and interest, which could strain already tight cash flows. Finance teams must reassess their tax liabilities to determine which items qualify for the reduced rates and which do not, potentially reshaping budgeting decisions for the next twelve months. Moreover, the exclusion of certain obligations may create a competitive disparity: firms that can afford full compliance on excluded taxes could gain an advantage over those that cannot.

On a broader scale, the move signals the government’s intent to tighten fiscal policy while still offering a limited safety net. Taxpayers who ignore the clarification risk unexpected liabilities that could affect profitability, creditworthiness, and even eligibility for government contracts. The clarity also reduces the risk of disputes with KRA, as both parties now share a common understanding of the programme’s boundaries. Ultimately, the amendment encourages early engagement with tax advisers to avoid costly surprises.

Practical steps

• Review your tax ledger: Identify which liabilities are listed as excluded in the KRA clarification and separate them from those eligible for amnesty.
• Consult your finance team or external adviser: Verify the classification of each outstanding tax item to ensure accurate filing before the amnesty deadline.
• Prioritise cash‑flow planning: Allocate resources to settle excluded obligations separately, avoiding the accumulation of penalties.
• Monitor official KRA communications: Stay updated on any further amendments or detailed lists of excluded taxes that may be released.
• Document compliance actions: Keep records of all payments made under the amnesty to facilitate future audits and avoid disputes.

Beavoren Ventures offers a specialised “Tax Planning & Compliance” service that can help SMEs navigate the nuances of the 2026 tax amnesty, ensuring that eligible liabilities are settled correctly while managing excluded obligations.

Need help with compliance? Email info@beavorenventures.co.ke or call +254 716 296 857.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.