The Finance Act 2026 tax amnesty
Which Kenyan tax arrears the Finance Act 2026 amnesty covers, what it waives, the 31 December 2026 payment deadline and how to plan the payments.
By Achekam · · 5 min read · For Running a business businesses in Kenya
Old tax debts have a way of growing while nobody looks at them. A VAT return paid late in a difficult year, a PAYE month that slipped during a cash squeeze, an assessment that was never fully settled: each one carries penalties and interest that keep adding up long after the original amount was due.
Kenya's Finance Act 2026 offers a way out of the extra charges, though not out of the tax itself. KRA describes a tax amnesty that waives penalties, interest and fines on older liabilities if the principal tax is paid by a fixed date. For a business carrying arrears, the window is worth taking seriously, and it closes at the end of 2026.
What the amnesty waives
KRA says the Finance Act 2026 tax amnesty covers penalties, interest and fines. It is equally clear about what it does not cover: the amnesty does not remove principal tax. The tax you should have paid in the first place is still owed in full.
To see why the waiver matters, look at what accumulates on unpaid tax. The Tax Procedures Act, as published on Kenya Law, charges late payment interest of one per cent per month or part of a month, as simple interest, from the due date until payment. The accrued interest may not exceed the principal tax. On top of that, section 83A sets a late payment penalty of five percent of the tax due.
A worked example in words: a business owes a month's tax that has been unpaid for several years. Interest has built up month by month, but it has stopped at the cap, equal to the principal. The late payment penalty sits on top. If the business pays the principal within the amnesty window, and meets KRA's conditions, the interest and penalty are what the amnesty addresses. The more interest has built up, the more the amnesty is worth. More on how the cap works is in late payment interest and its cap.
Which liabilities qualify
KRA says the amnesty applies to liabilities due up to 31 December 2025. Anything that fell due after that date is outside it, and normal interest and penalties continue to apply to it.
The amnesty is also, in KRA's words, subject to conditions. KRA's summary page, Finance Act 2026: what it means for you, sets out the amnesty alongside the Act's other changes, and is the place to read the conditions before you commit cash to the plan. Do not assume that every liability on your ledger qualifies until you have checked it against those conditions.
Paying the principal tax by 31 December 2026
The condition at the heart of the amnesty is payment: the outstanding principal tax must be paid by 31 December 2026. That date sits in a busy year. KRA says most Finance Act 2026 amendments take effect on 1 July 2026, the new import documentation requirement on 1 September 2026, and the new income tax return filing timelines on 1 January 2027. The amnesty deadline lands just before those new filing timelines begin.
Do not leave payment to the last week of December. Banks close for holidays, staff are away, and a payment that fails on the final day cannot be retried in time. Plan to finish well ahead of the date. For the other changes in the Act, see Finance Act 2026: changes for Kenyan businesses.
Payment plans and getting a tax compliance certificate
Many businesses look at their arrears because they need a tax compliance certificate for a tender or a licence. KRA says that to get one, a taxpayer must have filed all returns and paid all taxes on or before their due dates, and must have cleared all outstanding tax debt or obtained an approved payment plan.
Clearing old principal under the amnesty is one way of working towards that position. An approved payment plan is the other route KRA names for outstanding debt. Which route fits depends on your cash and on what KRA will accept, so discuss it with your tax adviser and KRA. The certificate itself is covered in Kenya's tax compliance certificate.
Recording each payment with its PRN in Achekam
An amnesty plan usually means several payments against several old liabilities. Each one needs to be traceable to the period it settles, or KRA's records and yours will drift apart.
Achekam records a Kenyan tax payment with KRA's own reference and receipt, which for Kenya is the PRN. It never generates a payment reference itself, it refuses Kenya's discontinued paybill 572572, and a second person must confirm each payment. For an amnesty clean-up that second check is valuable: it catches a payment recorded against the wrong tax head or period before it confuses the trail.
If KRA has raised assessments on any of the old periods, Achekam computes the objection and appeal deadlines for Kenyan assessments from the approved administration rule, set to the end of the day in Africa/Nairobi. Its filing calendar leaves out any deadline whose rule is awaiting approval or contested, and says why, so put 31 December 2026 in your own diary as well.
A step-by-step plan for clearing arrears
- List every outstanding liability, with its tax head, period and original due date.
- Mark those due up to 31 December 2025; they are the candidates for the amnesty.
- Read KRA's conditions and confirm each candidate meets them.
- Separate principal from penalties and interest in your list, so you know the cash you need.
- Agree the order of payment with your adviser, starting with the liabilities that matter most to your compliance status.
- Generate each PRN on KRA's system, pay, and record the payment in Achekam with its receipt for a second person to confirm.
- Check KRA's ledger after each payment, and ask for any penalty or interest that should fall away to be reflected.
Start with step one this month. A complete list of what you owe, and when it fell due, is the only way to know how much of the amnesty you can use.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
