The Kenya Revenue Authority (KRA) has reinstated the Nil Return filing option after completing system validations aimed at tightening tax compliance ahead of the 2025 income tax return cycle, which ends in June. The move eases concerns among taxpayers following a temporary suspension.
KRA’s Business Strategy, Technology and Enterprise Modernisation Department said on Friday that the Nil Return option will apply to January–December 2025 income tax returns filed after March 31, 2026, when enhanced validation checks embedded in the iTax system come into force.
The authority said the reinstatement does not affect ongoing filing obligations for earlier periods.
“The Nil Filing Return option has been reinstated after the necessary system validations were embedded for the 2025 returns to be filed after March 31, 2026,” KRA said.
“Filing for 2024 income tax returns and prior periods, and other monthly obligations such as PAYE [Pay As You Earn], excise duty, MRI [Monthly Rental Income], TOT [Turnover Tax] and others can proceed as before,” it added.
The temporary suspension of the Nil Return option earlier in January had caused confusion among individual taxpayers and small businesses, particularly those with no declared income but whose transactions were visible to the tax authority through third-party data sources.
KRA officials say the changes are part of a broader effort to curb abuse of Nil filings, especially among taxpayers whose income was subject to withholding tax but who still declared zero income.
Commissioner for Micro and Small Taxpayers George Obell said in an interview in late January that KRA systems had identified widespread misuse of Nil returns. He said 392,162 taxpayers who had taxes withheld from them in 2025 nonetheless filed Nil returns for the 2024 income year.
“When we check the system, we can see that these taxpayers still had transactions in 2024, yet they filed Nil returns,” Mr Obell said.
He said a common misconception among taxpayers is that withholding tax deducted at source—typically 5.0 percent for management or professional fees and 3.0 percent for contractual fees—is a final tax.
“That is not correct. It is an advance tax,” he said.
Mr Obell said KRA’s move to prepopulate income tax returns using third-party data would make it harder for taxpayers to omit income.
“This time, when we say we are prepopulating returns, that income will already have been captured by the time the taxpayer is seeing the return, and one will not be able to avoid it. Because we already have visibility of the 5.0 percent, we know what the total income is,” he said.
Many taxpayers, he added, will see income reflected in their prepopulated returns and voluntarily engage the authority, warning that failure to do so could trigger broader scrutiny.
“We will also communicate to taxpayers who choose, despite having been shown income on their prepopulated returns, not to come forward and engage the authority. That in itself will be an invitation to look not just at 2025 but also preceding years,” he said.
KRA has asked taxpayers to verify their Personal Identification Numbers (PINs) on iTax to ensure accuracy as the system increasingly relies on consolidated data streams.
The authority said its expanded data visibility is being driven by the rollout of the electronic Tax Invoice Management System (eTIMS), which captures transactional information across the economy and links suppliers, customers and transaction values.
The reinstatement of Nil filing comes amid KRA’s Income and Expenditure Verification programme, which began on January 1, 2026. The exercise pulls data from multiple sources—including eTIMS invoices, withholding tax certificates and import documentation—to verify figures declared by taxpayers.
KRA Deputy Commissioner Patience Njau said in January that the authority’s focus this year is to convert Nil filers, non-filers and zero payers into compliant taxpayers.
“This year, our focus will be very different as we aim to convert the Nil and non-filers and zero payers into paying taxpayers,” Ms Njau said at the time, explaining why Nil filings for 2025 returns had been temporarily restricted.
