The Kenya Revenue Authority (KRA) has outlined a raft of measures it plans to deploy against taxpayers who fail to file their 2025 Income Tax Returns by the June 30 deadline, including penalties, interest charges and default tax assessments.
In a warning to taxpayers, the authority said individuals and businesses that fail to submit their returns on time risk being subjected to enforcement action under the Tax Procedures Act.
At the top of KRA's enforcement arsenal is the issuance of default assessments, a mechanism used when taxpayers fail to file returns or where the authority determines that submitted returns are inaccurate.
"Taxpayers who fail to file returns by June 30, 2026 will be subject to default assessments in accordance with Section 29 of the Tax Procedures Act, Cap 469B," KRA said.
A default assessment is essentially a tax bill generated by the authority based on available information rather than figures declared by the taxpayer.
KRA relies on data such as previous tax returns, banking records and information obtained from third parties to estimate a taxpayer's income and tax liability.
Because such assessments are based on estimates, they can often be significantly higher than the taxpayer's actual obligation.
The assessments may also incorporate penalties and accrued interest, making them costly to challenge or settle.
Tax experts have long cautioned that default assessments place taxpayers in a difficult position because the burden of proving that the assessment is incorrect shifts to the taxpayer. Apart from default assessments, late filers face direct financial penalties.
For individual taxpayers, failure to file resident income tax returns by the deadline attracts a penalty of Sh2,000 or five per cent of the tax due, whichever is higher.
For companies and other non-individual taxpayers, the penalty rises to Sh20,000 or five per cent of the tax due, whichever amount is higher.
The consequences do not end there. Where tax remains unpaid after the due date, KRA imposes an additional interest charge of one per cent every month on the outstanding amount until the liability is fully settled.
Over time, these interest charges can substantially increase the amount owed.
For taxpayers who receive default assessments, KRA says there are avenues for redress, but strict timelines apply.
The quickest way to have a default assessment amended or cancelled is by filing accurate tax returns supported by the necessary documentation.
Taxpayers who believe an assessment is erroneous can also lodge a formal written objection. However, such objections must be filed within 30 days of receiving the assessment notice.
In addition, taxpayers are required to pay any portion of the tax liability that is not disputed while the objection is under review.
The warning comes as KRA intensifies efforts to boost compliance ahead of the June 30 filing deadline.
To encourage timely filing and reduce cases of non-compliance, the authority has expanded access to tax filing services through multiple digital platforms.
Taxpayers can submit returns through the iTax portal, dial 2225# on their mobile phones or use KRA's WhatsApp assistant, Shuru, on 0711 099 999. KRA has also introduced a temporary relief measure for business owners filing returns for the 2025 Year of Income.
Under the arrangement, businesses can declare legitimate expenses that may not yet be supported by eTIMS or TIMS invoices at the time of filing.
The claims will, however, remain subject to verification and audit after submission.
The authority has stressed that taxpayers taking advantage of the concession must retain supporting documents such as receipts, contracts and delivery notes to validate the expenses when required.
The measure is intended to facilitate timely filing before the June 30 deadline and will only apply to the 2025 Year of Income.
Beginning with the 2026 Year of Income, all deductible expenses must be supported by valid electronic tax invoices generated and transmitted through eTIMS or TIMS systems.
As part of its compliance campaign, KRA has also conducted taxpayer sensitisation caravans across different parts of the country to educate taxpayers on filing procedures and their obligations under the law.
"The conversations we shared, the questions you asked and the feedback you gave us have helped us better understand how to serve you more effectively. A Kenyan who understands their rights and responsibilities is a strength to the nation," the authority said.
With just weeks remaining before the filing deadline, KRA's message to taxpayers who fail to submit returns on time is that they could find themselves facing estimated tax bills, accumulating interest charges and lengthy disputes with the taxman.
