KRA to Automatically File Tax Returns for Non-Compliant Taxpayers After June 30 Deadline

The Kenya Revenue Authority (KRA) is taking a strict stand on tax filing and is now threatening non-compliant taxpayers - those who fail to file independently by 30th June 2026 - with automatic filing of their returns - a move they're rolling out with a tough compliance crackdown.

Default Assessment Policy

In a public announcement on Tuesday the 9th of June, KRA declared it will now be applying the hammer under the Tax Procedures Act - specifically Section 29 - which basically gives the tax authority the power to work out someone's tax bill on their behalf when they fail to file on time.

According to KRA, they will use all the data they already have in their systems to step in and fill in the gaps for those taxpayers who failed to submit on their own.

"Just to be clear, anyone who doesn't get their returns in to KRA by 30th June 2026 is going to be slapped with a default assessment under Section 29 of the Tax Procedures Act (Cap 469B)," KRA warned bluntly.

The Implications for Taxpayers

The upshot is that any taxpayer who doesn't file on time will have their tax liability worked out for them by KRA using whatever records and compliance information they already have on hand. And yes, you read that right - KRA still intend to charge the full Ksh 2,000 penalty for late filing - even though they will have already filled in the return for you.

Accurate Tax Reporting at Risk

Where this policy gets really interesting is that anyone who fails to file on their own may end up losing the chance to accurately declare their income and expenses and so on. KRA will soley be using the data they already have to work out your tax bill - which might not match up with what your actual financial position is. This can lead to two things: either you get charged too much tax (over-assessment) - or not enough tax (under-assessment) - and all of this can lead to a lot of hassle with disputes to be sorted out.

Of course, these disputes can be quite complex, and might require some pretty lengthy objections and reviews - more paperwork and red tape for taxpayers to wade through.

Temporary eTIMS Reprieve - 2025 Returns Only

And on a bit of a separate note, KRA has also just announced that businesses will be allowed to declare expenses that aren't supported by eTIMS for the 2025 year of income. This is a temporary measure to help out businesses who are really struggling.

"We're making an exception for the 2025 year of income: if you've got some valid business expenses that aren't supported by an eTIMS invoice, you can still declare them - but you'll need to upload the information and then KRA will validate it afterwards," the KRA statement went on to explain.

Stricter Requirements Starting Next Year

However, this is not a permanent fix - and from the 2026 year onwards, the rules are going to get a lot tougher. KRA will insist on electronic documentation for all income and expenses - and no exceptions.

"As of next year, from the 2026 year of income onwards, you'll need to have all your income and expenses properly documented using eTIMS/TIMS. No more exceptions, all electronic or nothing," the KRA has announced - a clear indication that they are committed to fully digitalising tax compliance.

And that's it - a major shift towards electronic documentation for all business and tax related transactions.