Inside The KRA Tax Amnesty 2026: Full Waiver on Penalties and Interest Explained

The Kenya Revenue Authority (KRA) has rolled out a fresh tax amnesty programme under the Kenya Revenue Authority, giving taxpayers a six-month window to clear outstanding obligations without paying penalties, interest, or fines tied to older tax debts.

Introduced under the Finance Act, 2026, the programme targets tax liabilities accrued up to 31 December 2025 and will run from 1 July 2026 to 31 December 2026.

KRA says the initiative builds on earlier amnesty cycles that collected KES 80.9 billion in principal tax payments, while also bringing thousands of taxpayers back into compliance.

What the KRA Tax Amnesty Covers

The KRA tax amnesty programme waives 100% of penalties, interest, and fines on eligible tax debts, but leaves the principal tax intact unless it is settled or structured under an approved plan.

Key relief areas include:

• Tax debts accrued up to 31 December 2025
• Penalties and interest linked to cleared or settled principal tax
• Late filing penalties for taxpayers with no outstanding principal tax

How the New KRA Tax Amnesty Works

1. Automatic waiver for taxpayers who cleared principal tax

Taxpayers who fully paid their principal tax obligations by 31 December 2025 will automatically receive relief on any remaining penalties and interest.

No application is required. The system will apply the waiver once accounts are verified.

Example:
A trader who cleared KES 150,000 in VAT principal tax in 2025 but still owes KES 40,000 in penalties will have the penalties cleared automatically under the amnesty.

2. Relief for taxpayers with only penalties

Taxpayers with no outstanding principal tax but who have late filing penalties will qualify for automatic waiver once all missing returns are submitted.

Example:
A freelancer who filed nil returns late for 2023 and 2024, and now only owes penalties, will have those penalties cleared after filing the missing returns.

3. Full waiver through lump-sum payment

Taxpayers with unpaid principal tax from before 2026 can access full waiver benefits by paying the principal amount in a single settlement during the amnesty window.

Once payment is made, penalties and interest tied to that debt are removed.

Example:
A business owing KES 500,000 in corporate tax principal plus KES 220,000 in penalties can clear the principal and have the penalties fully waived.

4. Structured payment plans via iTax

Taxpayers unable to settle in full can apply for structured payment plans through the iTax system. Conditions include:

• All principal tax must be cleared by 31 December 2026
• Payments must remain consistent within the agreed schedule
• Completion within the timeline unlocks full waiver of penalties and interest

What Is Excluded From the Amnesty

The programme does not apply to all tax liabilities. Key exclusions include:

• Tax debts arising from 1 January 2026 onward
• Any new penalties, interest, or fines from 2026 tax periods
• Principal tax that remains unpaid after the amnesty conditions lapse

In effect, all post-2025 obligations remain fully enforceable.

Tax disputes and Alternative Dispute Resolution

Taxpayers with ongoing disputes are encouraged to use KRA’s Alternative Dispute Resolution framework to settle principal tax amounts and unlock eligibility.

This pathway allows disputed assessments to be resolved without prolonged litigation, provided the principal tax is agreed and settled within the amnesty period.

Example:
A company disputing a KES 2 million assessment may resolve the principal through ADR, then benefit from waiver of penalties and interest once payment terms are met.

Why the Programme Matters

The KRA amnesty program is designed to give taxpayers a structured path to regularisation of historical tax obligations while improving compliance levels across different sectors.

For businesses and individuals, the programme lowers the cost of settling long-standing tax issues, particularly where penalties and interest have grown over time.

For the revenue authority, previous cycles demonstrated strong uptake, with KES 80.9 billion collected in principal taxes indicating substantial underlying unpaid obligations.