KRA Opens Instalment Payments Under 2026 Tax Amnesty Programme

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KRA Opens Instalment Payments Under 2026 Tax Amnesty Programme: What Taxpayers Need to Know
Current Business News | Marketplace Revival Experience
6 October 2026
Kenyan taxpayers with outstanding principal tax liabilities can now apply to clear their debts through instalment payments under the 2026 Tax Amnesty Programme, in a move that could provide significant relief to businesses and individuals struggling with accumulated tax penalties and interest.
The Kenya Revenue Authority (KRA) has introduced an Automatic Payment Plan (APP) on iTax, allowing eligible taxpayers to spread payment of their outstanding principal tax over an agreed period while taking advantage of the tax amnesty.
The programme is particularly important for businesses that have accumulated tax arrears but remain viable and are looking for a structured way to regularise their tax position.
100% Waiver on Penalties, Interest and Fines
One of the biggest benefits of the programme is the potential for a 100 per cent waiver of penalties, interest and fines.
Taxpayers who clear their entire outstanding principal tax balance by December 31, 2026 will qualify for a full waiver on penalties, interest and fines relating to tax debts accrued up to December 31, 2025.
This means that taxpayers should distinguish between the principal tax they owe and the additional amounts that may have accumulated because of penalties, interest and fines.
For a business with substantial historical tax arrears, this distinction could translate into significant savings.
Example
Suppose a business has:
Tax Liability Amount
Principal tax Sh500,000
Interest Sh150,000
Penalties & fines Sh100,000
Total outstanding Sh750,000
If the taxpayer qualifies for the amnesty and clears the Sh500,000 principal tax by December 31, 2026, the qualifying Sh250,000 in penalties, interest and fines could be waived.
The actual waiver will depend on the taxpayer's eligibility and the tax debts covered by the programme.
Taxpayers Can Pay in Instalments
The introduction of the Automatic Payment Plan on iTax is particularly important for SMEs.
Many businesses may have genuine tax arrears but lack the cash flow to settle their entire principal liability immediately.
Rather than requiring such taxpayers to find the entire amount at once, the payment-plan facility provides a structured mechanism for settling the outstanding principal through instalments.
For an SME, this could make the difference between:
tax compliance becoming a manageable cash-flow obligation
and
a historical tax debt continuing to grow into an unmanageable liability.
Business owners should therefore assess their outstanding principal tax and determine whether an instalment arrangement is appropriate for their cash-flow position.
Even Some Filing Penalties Can Be Waived
The programme is not limited only to taxpayers with outstanding principal tax.
Certain late-filing penalties can also qualify for the waiver where there is no outstanding principal tax.
For example, a taxpayer who incurred the Sh2,000 return-filing penalty but does not owe principal tax may qualify for the waiver under the programme.
This could be particularly relevant to individuals and small businesses that filed returns late but subsequently settled the underlying tax obligation.
The Waiver Is Automatic—but Check Your iTax Ledger
Another important feature is that eligible waivers are applied automatically.
However, taxpayers should not simply assume that everything has been correctly cleared.
KRA is encouraging taxpayers to monitor their iTax ledgers and confirm that the relevant penalties, interest and fines have actually been removed.
This is an important business-control measure.
A taxpayer should retain evidence of:
• The outstanding principal balance
• Payment-plan applications
• Instalment payments
• Tax payment receipts
• Previous tax returns
• The iTax ledger before the waiver
• The iTax ledger after the waiver
Maintaining this documentation can help resolve future reconciliation issues.
Why This Matters to SMEs
For SMEs, tax arrears can become a serious financial problem.
A business may initially owe a relatively manageable amount in principal tax. However, penalties and interest can accumulate over time, increasing the total liability and putting pressure on already-constrained cash flows.
The 2026 Tax Amnesty Programme provides an opportunity for qualifying taxpayers to clean up historical tax liabilities.
From a business advisory perspective, this should not be viewed simply as a tax-saving opportunity.
It is also an opportunity to improve the financial health of the business.
A business that clears historical tax obligations can potentially improve its:
• Cash-flow planning
• Financial reporting
• Tax compliance position
• Bankability
• Creditworthiness
• Ability to access financing
• Investor readiness
• Relationship with suppliers and financial institutions
Tax Compliance Can Affect Access to Finance
For businesses seeking bank financing, tax compliance is often an important component of financial due diligence.
Banks and other financiers may review tax compliance certificates, financial statements, tax returns and outstanding statutory obligations when assessing a business or project.
A significant unresolved tax liability can therefore complicate financing discussions.
For an SME planning to apply for a loan, asset finance, working-capital facility or project financing, resolving historical tax issues could strengthen its overall financial position.
This makes the tax amnesty relevant not only to accountants and tax advisers, but also to business owners seeking growth capital.
What Should Taxpayers Do Now?
Taxpayers who believe they may benefit from the programme should take a structured approach.
1. Check Your iTax Ledger
Determine exactly what you owe and separate:
Principal tax + Interest + Penalties/Fines
Do not rely on an old tax statement or memory.
2. Confirm the Principal Amount
The principal tax is critical because the full waiver is linked to clearing the qualifying principal balance within the programme's deadline.
3. Assess Your Cash Flow
If you cannot settle the principal immediately, examine whether an instalment arrangement through the Automatic Payment Plan is suitable.
4. Review Historical Returns
Businesses should reconcile their tax returns against their accounting records and bank transactions to ensure that the iTax position is accurate.
5. Monitor the Waiver
After making the required payments, regularly check the iTax ledger to confirm that eligible penalties, interest and fines have been waived.
6. Keep Supporting Documents
Keep payment receipts, applications, correspondence and ledger statements as part of the company's tax records.
A Deadline Businesses Should Not Ignore
The critical date is:
31 December 2026
Taxpayers seeking the 100 per cent waiver should ensure that their qualifying principal tax is fully settled by this deadline.
Waiting until the final weeks could create unnecessary pressure, particularly for businesses that need to raise substantial amounts of cash.
SMEs should therefore begin the assessment early and incorporate the tax liability into their cash-flow forecasts.
Marketplace Revival Business Advisory View
The 2026 Tax Amnesty Programme presents an important opportunity for taxpayers to reset their tax position.
But the real objective should not simply be to obtain a waiver.
It should be to emerge from the programme with a stronger financial-control system.
A business that clears its historical tax debt but continues to file returns late, maintain poor accounting records or fail to reconcile its tax ledger will eventually find itself facing the same problem again.
The better approach is:
Clear the past. Reconcile the present. Strengthen the systems. Plan for the future.
For SMEs, tax compliance should be treated as part of financial management and business readiness, not merely as an obligation to KRA.
Businesses that use this opportunity strategically can potentially reduce historical liabilities, improve their financial position and position themselves better for future growth and financing.
The Bottom Line
If you have outstanding principal tax, check your iTax account now.
If you cannot pay the full principal immediately, explore the Automatic Payment Plan.
And if you qualify for the amnesty, don't wait until the deadline.
December 31, 2026 could be an important opportunity to wipe out qualifying historical penalties, interest and fines and start 2027 with a cleaner tax and financial position.