KRA Reinstates Nil Return Filing as It Tightens Tax Compliance Measures

The Kenya Revenue Authority (KRA) has returned the option for Nil Return filing after completing some major system upgrades aimed at making sure everyone pays their fair share of tax before the 2025 income tax filing season comes to a close in June - which marks the end of the filing period. The move comes after a temporary suspension which caused a fair bit of concern amongst taxpayers.

As per KRA’s Business Strategy, Technology and Enterprise Modernisation Department, the Nil Return option will now apply to income tax returns filed after March 31st 2026. That’s when the new system checks built into the iTax system will have had time to become fully available.

It's worth noting though, that this change doesn't change the filing obligations for income tax returns before 2025.

Filing for 2024 & Other Taxes Continues As Usual

KRA made it clear that income tax returns for 2024 and all prior years, as well as things like PAYE (Pay As You Earn), monthly excise duty, Monthly Rental Income (MRI), and Turnover Tax (TOT) should be filed just like any other tax year.

When the option for Nil filing was taken away in January, alot of people got confused - especially individuals and small businesses who hadn't earned any money but had transactions appearing in their records from third party data sources.

Why KRA Tighened Up Nil Filing Rules

Tax officials reckon the changes are aimed at tackling the widespread abuse of the Nil return option.

Commissioner for Micro and Small Taxpayers George Obell said KRA found out that in 392,162 cases taxpayers had tax withheld in 2025 but still filed as if they had no income at all in 2024. He said that when they looked into it further, alot of these people were actually earning money - at least according to their records.

Problem is alot of people seem to misunderstand that withholding tax deducted at source - such as 5% for management or professional fees and 3% for contractual fees - is considered the final tax you pay. But KRA says that's flat out wrong - withholding tax is just a down payment and you still need to reconcile it when you do your annual return.

Prepopulated Returns To Increase Transparency

To prevent underreporting, KRA is making it easier for the system to pull income info from third party data, so prepopulated returns will be the norm from now on. This means income already captured through withholding tax records, invoices or other data sources will automatically appear in your return.

Officials reckon this makes it alot harder to leave out income - and if you do ignore the prepopulated figures you can expect some extra scrutiny, including reviews of previous years.

KRA is reminding taxpayers to double check that their PINs are up to date on iTax - because the system is now relying on all these different data streams to get a clear picture.

Expanded Data Monitoring Through eTIMS

The authorities enhanced data visibility is backed up by the electronic Tax Invoice Management System (eTIMS), which keeps track of all transaction details across the economy and links up all the key players and values.

The reinstatement of Nil filing happens to coincide with KRA’s Income and Expenditure Verification programme which got going on January 1st, 2026. This uses a combination of eTIMS invoices, withholding tax certificates and import records to verify what people are actually earning.

KRA Deputy Commissioner Patience Njau said that for 2026, their focus will be on getting as many Nil filers, non-filers and zero payers as possible into fully compliant taxpayers.