TPA 1
Registration, records, returns and assessments
1Scope and legal basis
The Tax Procedures Act 2015 (TPA), in force from 19 January 2016, harmonised the administration of income tax, VAT, excise duty and the levies into one procedural code, leaving each tax's own Act to set the charge and rates (customs remains under the EACCMA). Part III deals with registration and the PIN, Part IV with record keeping, Part V with tax returns, Part VI with assessments, and the later Parts with payment and recovery, objections and appeals, penalties and offences. The Act is amended every year alongside the Finance Act; the Tax Procedures (Amendment) Act 2024 added the electronic tax invoice provisions and the eTIMS integration power, and the Finance Act 2026 added prepopulated returns, PIN reinstatement, reporting duties for virtual asset service providers, wider information sources for assessments and recovery of levies as tax. The KRA's iTax portal is the platform for everything in this topic.
2Key definitions
Personal Identification Number (PIN)
The unique number the Commissioner issues to every taxpayer on registration under section 8; a single PIN covers all tax obligations, and the First Schedule lists the transactions for which a PIN must be quoted (land transactions, motor vehicle registration, business registration, bank account opening, import and export, insurance policies, public tenders, employment, utility connections, and others).
Tax agent
A person licensed by the Commissioner under section 20 to prepare returns, represent taxpayers and transact on their behalf, on the recommendation of the Tax Agents Committee; a tax agent must be a fit and proper person with prescribed qualifications (ICPAK membership or equivalent), and a licence may be cancelled for misconduct.
Self-assessment return
A return in which the taxpayer computes and declares the tax due; on filing, the taxpayer is treated as having made a self-assessment of that amount under section 28, which the Commissioner may later amend.
Default assessment
An assessment under section 29 the Commissioner raises, to the best of judgement, on a taxpayer who has failed to file a return; the taxpayer's remedy is to file the return and object.
Amended assessment
An assessment under section 31 that amends a self-assessment or earlier assessment, raised within five years of the original return (no limit where there is fraud, gross or wilful neglect, or evasion), on the basis of an audit or information; the taxpayer may also apply to amend their own return within five years.
Advance assessment
An assessment under section 30 raised before the due date for a return where the Commissioner believes the taxpayer is about to leave Kenya, cease business, or otherwise put the tax at risk.
Electronic tax invoice and eTIMS
The invoice generated through the KRA's electronic Tax Invoice Management System under section 23A, mandatory for every business from 1 January 2024, carrying the prescribed particulars; the buyer's deduction for income tax and VAT depends on it.
3Charge, computation and rates
Registration and records
- Every person liable to tax or required to file a return registers for a PIN on iTax with national ID or company registration details, and adds obligations (income tax individual or company, PAYE, VAT, excise, turnover tax, rental income) as they arise; a non-resident may register directly or through a tax representative, and a non-resident opening a Kenyan investment bank account no longer needs a PIN (Finance Act 2026). A PIN can be deregistered when obligations cease and, since 2026, reinstated with the same number.
- Records: a taxpayer keeps, in English or Kiswahili and in Kenya, the records needed to determine the tax liability (books of account, invoices, receipts, bank statements, contracts, payroll records, stock records, transfer pricing documentation) for five years from the end of the period they relate to, or until any dispute is resolved; electronic records are acceptable if accessible to the Commissioner. Failure to keep records attracts a penalty of 10% of the tax payable for the period or KES 100,000, whichever is higher.
- Electronic tax invoices: every business issues sales invoices through eTIMS; businesses with turnover above KES 5 million may be required to integrate their systems with the KRA's data management system, with a penalty of up to KES 100,000 per month for non-compliance; suppliers exempt from eTIMS (turnover of KES 5 million or less, small-scale farmers) are covered by buyer-initiated invoices.
- Information: the Commissioner may require any person, including banks, mobile money operators, land and vehicle registries, county governments and online platforms, to furnish information and access to premises, records and data, and may use withholding declarations, PAYE and eTIMS data, third-party returns and whistleblower information to raise assessments (Finance Act 2026). Virtual asset service providers file annual information returns on their users' transactions.
The return calendar
| Return | Period | Due date | Who |
|---|---|---|---|
| PAYE (P10) with fringe benefit tax; AHL, SHIF and NSSF on their portals | Monthly | 9th of the following month | Every employer |
| Withholding income tax | Per deduction | Within five working days of deduction | Every withholding agent |
| Withholding VAT | Per deduction | Within five working days | Appointed agents |
| VAT (VAT 3) | Monthly | 20th of the following month | Registered persons and reverse-charge recipients |
| Excise duty | Monthly | 20th of the following month (5th for alcoholic beverage removals) | Licensed manufacturers and service providers |
| Turnover tax | Monthly | 20th of the following month | TOT taxpayers |
| Monthly rental income tax | Monthly | 20th of the following month | MRI landlords |
| Significant economic presence tax; digital asset tax | Monthly; per transfer | 20th of the following month; five working days | Non-resident digital suppliers; platforms |
| Instalment tax | Quarterly | 20th of the 4th, 6th, 9th and 12th months of the accounting year | Companies and individuals with non-employment income above the threshold |
| Income tax return: individual (IT1) | Calendar year | 30 June of the following year | Every individual with a PIN, including nil returns |
| Income tax return: company, partnership, trust (IT2C, IT2P, IT2T) | Accounting year | Within six months of the year end; within four months for years starting on or after 1 January 2027 (Finance Act 2026) | Companies, partnerships, trustees |
| Balance of tax | Accounting year | Within four months of the year end | Companies and individuals in instalment tax |
| Minimum top-up tax | Accounting year | End of the fourth month after the year end | In-scope multinational entities |
| Capital gains tax (CGT 1) | Per transfer | Earlier of receipt of full price and registration of the transfer | Transferors |
| Transfer pricing local file, master file, country-by-country report | Accounting year | Within six months of the year end; CbC notification by the year end | Groups above KES 95 billion; documented groups on request |
| Stamp duty | Per instrument | Within 30 days of execution | Transferee, lessee, mortgagor, company |
Assessments
- Self-assessment on filing; the Commissioner may issue a prepopulated return from eTIMS and third-party data which the taxpayer confirms or amends within the prescribed period (Finance Act 2026), and may amend a self-assessment within five years of the filing date, or at any time in a case of fraud, gross or wilful neglect or evasion. The taxpayer may apply to amend their own return within five years, and an amended return that increases tax is treated as a self-assessment of the higher amount.
- Default assessment where no return is filed; advance assessment where tax is at risk; and the Commissioner may assess the tax due where a person has participated in a tax avoidance scheme (section 85, expanded by the Finance Act 2026) or where a transfer pricing adjustment is required.
- A notice of assessment states the tax, the period, the basis, the due date and the taxpayer's right to object within 30 days; an assessment is final and conclusive after the objection period unless objected to or amended.
- The Commissioner's audits are triggered by risk profiling (eTIMS mismatches, VAT credit positions, withholding data, sector benchmarks, whistleblower reports) and follow a notification, information requests, a preliminary findings letter, the taxpayer's response, and the assessment; the taxpayer is entitled to reasons and to the documents relied on.
- Time limits protect the taxpayer: no assessment beyond five years without fraud or wilful neglect; refund claims within five years (income tax) or twelve months (other taxes); records for five years.
4Compliance: returns, payment and penalties
| Failure | Penalty under the TPA |
|---|---|
| Failure to register (VAT, excise, PIN when required) | KES 100,000 per month or part of a month (VAT registration); prescribed amounts for other registrations; tax that should have been charged remains payable |
| Late filing of an income tax return | Individual: the higher of 5% of the tax due and KES 2,000. Company and other bodies: the higher of 5% of the tax due and KES 20,000. Turnover tax: KES 1,000 per month. Nil returns filed late attract the minimum |
| Late filing of a VAT or excise return | The higher of 5% of the tax due and KES 10,000 |
| Late filing of a PAYE return, or failure to deduct or remit PAYE | The higher of 25% of the tax due and KES 10,000 |
| Failure to confirm or amend a prepopulated return (2026) | The higher of 5% of the tax due, KES 100,000 for a company and KES 10,000 for an individual; penalties from a proven electronic system error may be waived up to KES 2 million |
| Failure to keep records | The higher of 10% of the tax payable for the period and KES 100,000 |
| Failure to issue an eTIMS invoice | Double the tax due on the sale; failure to integrate where required up to KES 100,000 a month |
| Failure to file transfer pricing or CbC documentation | KES 1 million per return |
| Failure by a virtual asset service provider to file the information return, or filing a false one (2026) | Prescribed penalties per return |
| Failure to submit a return by a tax agent, or a false return prepared by an agent | KES 100,000 and cancellation of the licence |
A taxpayer who cannot file on time may apply for an extension before the due date, which does not extend the payment date (interest still runs); an extension is granted at the Commissioner's discretion and in practice for individual returns rarely. A tax compliance certificate is issued to a taxpayer whose returns and payments are current, and the certificate (valid twelve months) is a condition of public tenders, some licences and employment in the public service.
5Examinable focus
What KASNEB tests
Expect 'state the due dates for the following returns and payments' across PAYE (9th), withholding (five working days), VAT, TOT, MRI and excise (20th), instalment tax (months four, six, nine and twelve), the individual return (30 June), the company return (six months, four from 2027) and balance of tax (four months): a table earns full marks. Theory parts ask for the transactions requiring a PIN, the record-keeping rules and period, the types of assessment and the five-year time limit, the tax agent regime, and the eTIMS obligations and penalties. Give the exact penalty amounts and percentages; approximate figures lose the marks. The 2026 prepopulated return and its penalty scale are new.