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Tax Year

The tax year in Kenya is the calendar year, 1 January to 31 December. Alternative tax years are allowed.

Tax Registration and Deregistration

Under the domestic tax laws, a person is required to register as a taxpayer with the Commissioner, within 30 days of accruing a tax liability or expecting to accrue a tax liability either under the Income Tax laws or under the VAT laws. Non-residents without a fixed place of business in Kenya are required to appoint a tax representative when required to register for tax.

The person is also required to deregister within 30 days once the person ceases to meet the registration requirements under the tax law.

Tax Return Filing

Annual tax returns must be filed by the last day of the 6th month following the close of the previous tax year. Taxpayers can apply for an extension to file tax returns.

Tax Payments

Non-agricultural companies in Kenya are required to make four provisional income tax payments by the 20th of the 4th, 6th, 9th, and 12th months of their accounting period. The payments can be based on either 110% of the previous year's tax liability, or based on the current period's estimated tax liability. The final payment of any balance due is required to be made within four months of the close of the tax period. Taxpayers can apply for an extension for payment of tax.

The minimum tax is payable in four installments by the 20th day of each period ending on the 4th, 6th, 9th, and 12th month of the tax year if the minimum tax amount is higher than the standard tax installment payable. In case the total tax payable is greater than the minimum tax paid, then the final payment of the balance is required to be made within four months of the close of the tax period.

On 20 April 2021, the High Court issued an order temporarily suspending the implementation of the Minimum Tax. On 20 September 2021, the High Court issued the final verdict and held that the minimum tax imposed is unconstitutional As the final verdict is in favor of the taxpayer, a credit will be retained in the iTax ledger for the taxpayers who have already paid the instalments of minimum tax before 20 September 2021. However, the Kenya Revenue Authority (KRA) filed an appeal against the High Court ruling to the Court of Appeal. On 2 December 2022, the Court of Appeal dismissed the KRA’s appeal and upheld the High Court Judgment that the minimum tax is unconstitutional (see Sec. 8.1.1.).

Capital gains tax is due by the 20th of the month following the month in which a transfer is made.

Tax Amnesty Regime

The Finance Act 2023 provides for a new tax amnesty regime providing for a waiver of interest and penalties on tax liabilities due up to 31 December 2022. The tax amnesty regime applies for the period 1 September 2023 to 30 June 2024, as follows:

A taxpayer can benefit from an automatic waiver of interest and penalties without filing an amnesty application if the taxpayer has paid all principal taxes due by 31 December 2022; and
In other cases, the taxpayer can apply for relief from interest and penalties on the unpaid tax accrued up to 31 December 2022, provided that all outstanding principal taxes are paid by 30 June 2024 and certain other conditions are met.

The guidelines on tax amnesty is issued by the KRA.

The guidelines on tax amnesty and a step-by-step guide on the iTax application process have been issued by the KRA.

Tax Amnesty Regime

Effective 7 November 2019, a tax amnesty regime is introduced whereby no penalties and interest will be recovered from a company that is listed on the growth segment of a securities exchange in Kenya, with respect to any year of income prior to the date of listing. The tax amnesty is applicable subject to fulfillment of the following conditions:

The company makes full disclosure of its past income, assets, and liabilities for the two years immediately preceding the date of listing; and
The principal tax is paid in full.

Further, the tax amnesty is not applicable if the taxpayer is under assessment and/or is under a tax audit or investigation. The regime applies until 7 November 2022. A company that delists before the lapse of five years after listing will be assessed for all taxes, penalties, or interest for the years it was in operation prior to listing.

Voluntary Tax Disclosure Program

Effective 1 January 2021, a Voluntary Tax Disclosure Program (VTDP) is introduced for a period of 3 years, which provides a waiver of the interest and penalty for the disclosure of the tax liabilities related to the five-year period prior to 1 July 2020. The relief is as follows:

Full relief, if the disclosure is made and the tax liability is paid in the first year of the program (from 1 January 2021 until 31 December 2021);
50% relief, if the disclosure is made and the tax liability is paid in the second year of the program (from 1 January 2022 until 31 December 2022); and
25% relief, if the disclosure is made and the tax liability is paid in the final (third) year of the program (from 1 January 2023 until 31 December 2023).

Taxpayers under audit, investigation, ongoing litigation in respect of the tax liability or who are notified of a pending audit or investigation are not eligible for this program.

The KRA clarified that the application under the VTDP can be made online through the iTax portal and successful applicants will receive VTDP certificates via their registered email addresses.

A step-by-step guide on the VTDP application process together with FAQs is issued by the KRA.

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