NAIROBI, Kenya May 25 – Stakeholders appearing before the National Assembly Departmental Committee on Finance and National Planning have broadly welcomed the government’s proposal to introduce a new tax amnesty program under the Finance Bill, 2026.
However, the stakeholders who submitted their proposals to the Committee strongly urged lawmakers to push forward critical compliance deadlines and address restrictive clauses surrounding overpaid tax refunds to avert an impending liquidity crisis.
The proposed tax amnesty program, which targets tax liabilities accrued up to December 31, 2025, offers taxpayers full relief from penalties and interest, provided they clear their principal tax amounts before December 31, 2026.
To unlock the full potential of the policy, stakeholders petitioned the Committee to consider extending the tax amnesty window to June 30, 2027.
“This would allow businesses to use two full fiscal cycles to organize the capital required to clear outstanding principal liabilities”, they submitted.
While stakeholders described the initiative as a major step toward cleaning up corporate ledgers and alleviating commercial financial stress, major concerns were raised regarding the tight implementation windows and aggressive shifts in statutory timelines.
The Kenya Private Sector Alliance (KEPSA), representing over two million businesses, lauded the move as a strategic fiscal intervention that provides businesses with an ideal pathway to formalization and voluntary regularisation.
“KEPSA is highly appreciative of the collaborative wins realized in the Finance Bill 2026. These positive inclusions are the direct result of sustained private-sector advocacy through structured engagement, policy dialogue, and evidence-based submissions to the National Treasury and the National Assembly”, the Alliance told the lawmakers.
They acknowledged that provisions such as the one on tax amnesty demonstrated the government’s commitment to creating a conducive environment for business.
Despite lauding the initiative, the Alliance warned that the current expiration date of December 31, 2026, creates an unnatural liquidity trap for businesses still recovering from prior economic shocks.
KEPSA, in particular, pointed out that many enterprises possess significant principal debts but lack the immediate operational cash flow required to clear them within a single calendar year.
While supporting this position, tax advisory services firm Grant Thornton proposed that the amendment be maintained with enhancements to establish a more predictable and structured framework for the remission of penalties and interest upon settlement of the principal tax. Alternatively, they proposed modifying the payment deadlines to extend the cutoff to June 30, 2027.
“While the extension of the amnesty period is commendable as it encourages settlement of outstanding principal taxes and provides relief from accumulated penalties and interest, repeated short-term extensions may create uncertainty for taxpayers”, noted Samuel Mwaura, Tax Partner at Grant Thornton Taxation Services.
In the long term, they proposed that consideration be given to establishing a clear and predictable framework for the remission of penalties and interest under the Tax Procedures Act where taxpayers voluntarily settle the principal tax.
”The proposed tax amnesty is a highly commendable move that will assist taxpayers in cleaning up their ledgers and regularising past omissions without the burden of punitive historical penalties”, they submitted.
However, they similarly expressed concern that the timeline was tight.
“To maximize compliance and ensure that corporations can sustainably honour these commitments, the amnesty program needs to be extended to provide businesses breathing room to restructure their debts”, the tax advisory firm stated.
Beyond the amnesty program, stakeholders expressed profound concern over the Bill’s proposal to drastically pull forward the annual income tax return filing deadline.
Currently, individuals and corporations have six months after the end of the income year to file their returns. The new Bill proposes to shorten this to just four months, establishing a hard deadline of April 30 instead of June 30 for companies running on a calendar financial year.
Furthermore, the Bill mandates that “Nil” returns must be filed within just one month following the close of the income year.
The stakeholders cautioned that this compression would trigger a logistical nightmare, especially for multinational firms and large corporate groups whose complex financial audits routinely take up to five months to fully conclude.
”While fixed deadlines offer certainty, a four-month window is insufficient for many taxpayers. Preparing tax returns depends heavily on finalizing audited financial statements, which requires completing audits, resolving queries, and obtaining board approvals”, KEPSA explained.
“Regulated sectors face even more statutory filings and validations. Forcing an accelerated timeline would compel businesses to file based on unaudited or estimated data, leading to frequent amendments and undermining the accuracy of tax reporting. The one-month deadline for nil returns is similarly impractical,” a KEPSA representative stated during the committee presentation.
Not convinced by this explanation, Committee Members challenged the pushback.
“Hon. Chair, I am wondering, do we have a shortfall for accountants in this country? I see this as an opportunity to create more formal jobs in the accounting sector “, noted Committee Member David Mboni (Kitui Rural).
Kesses lawmaker Julius Rutto pointed out the need for companies to enhance their efficiency to comply with this new provision. He observed that even if companies were granted more than six months, some would still struggle to meet the timelines.
This position was supported by John Ariko (Turkana South) who urged companies to embrace technology to ensure timely submission of tax returns.
In response, stakeholders attributed part of the failure to meet statutory deadlines to inefficiencies within the Kenya Revenue Authority (KRA). They stressed the need for the KRA to ensure its backend systems are fully ready before implementing any new tax filing measures.
They cited the current tax filing system, noting that last year it proved technically challenging for a significant number of taxpayers trying to file their tax returns.
The concern caught the attention of Committee Chairperson Kuria Kimani (Molo), who pledged that the Committee would advocate for the KRA to reciprocate with backend readiness.
“Hon. Members I think that the issues the stakeholders are raising are relevant and we need to put KRA to task to ensure they offer the necessary support to the taxpayers to meet their obligations”, he noted.
The stakeholders further trained their focus on the refund of overpaid tax balances and ongoing tax refund challenges. They expressed concern over the proposed deletion of provisions that allow taxpayers to automatically utilize verified overpaid taxes to offset other outstanding tax liabilities without requiring explicit, prolonged approval from the KRA.
Under current practices, if a business overpays its Value Added Tax (VAT), it can seamlessly use that credit balance to cover emerging obligations like Pay-As-You-Earn (PAYE) or Corporate Income Tax, thereby maintaining stable cash flows.
Stakeholders argued that removing this offsetting flexibility essentially locks away billions of shillings of private-sector working capital in long bureaucratic pipelines, stifling business growth.
”The restriction on utilizing overpaid taxes to clear other tax liabilities is a step backward for business liquidity,” explained Mwaura of Grant Thornton.
Homa Bay lawmaker Peter Kaluma however expressed concern that tax administration was costing the country huge revenues and urged the stakeholders to only make practical proposals that would ensure that the government has the funds to meet its obligations.
“ Given the high cost of tax administration in this country, I am a bit hesitant to support proposals relating to zero-rating unless you convince me otherwise”, he said.
Meanwhile, Hon. Kimani moved to assure the stakeholders that the Committee would accord all the stakeholders a fair hearing of their proposals, noting that their submissions had over the years shaped the outcome of the taxation legal framework.
“I want to assure you that this Committee will accord you a fair hearing and will keenly consider your submissions. As you are aware because you have appeared before this Committee for a long time, there is always a big difference between the proposals we receive from the National Treasury and the final Bill that is enacted”, Kimani observed.
He emphasized that public participation is not an exercise in futility adding that the Committee in its consideration of their views would need to find a balance between ensuring that the government has the ability to deliver on its mandate, while creating a conducive environment for business to thrive”, he concluded.
