The Essentials: Runs July 1 – Dec 31, 2026. Covers tax debt from on/before Dec 31, 2025. Pay the principal, penalties and interest are waived. No principal relief. One-time only — no fourth round expected.
A mid-sized hardware retailer in Nairobi spent most of June avoiding a phone call. The number belonged to their accountant, and the accountant wanted to talk about a VAT balance from 2024 that had sat untouched on the company’s iTax ledger for two years — KES 300,000 in unpaid principal, and by now, another 180,000 stacked on top of it in penalties and interest. The owner’s plan, more or less, had been to deal with it “when things settled down.” Things hadn’t settled down. The balance had just kept growing.
That kind of standoff — a business that can eventually pay what it owes but keeps finding reasons not to face it — is exactly what KRA’s new tax amnesty is built for.
Pay the principal, and the penalties and interest built up on top of it disappear. For the hardware retailer, that’s the difference between owing 480,000 and owing 300,000.
This is the third time KRA has run something like this since 2023; the first two rounds together brought in more than KES 80 billion in principal tax from over 2.6 million taxpayers. Treasury Cabinet Secretary John Mbadi has described this round as intended to ease pressure on struggling taxpayers while also improving collection — a mutual-benefit pitch that’s easy to be cynical about, except that the numbers from the earlier rounds back it up. Both KRA and the amended law are explicit this time: there won’t be a fourth round.
Finding the number
The retailer’s first move — and the one most taxpayers skip — was logging into iTax and looking. Under Debt and Enforcement, the ledger breaks each obligation into principal, penalty, and interest, period by period. Plenty of businesses log in expecting a debt and find the ledger clean, or expecting something small and finding a number that isn’t.
Not every business in this position has real debt. A common variant is the company that filed every return but did so late a few times, racking up small fixed penalties — the standard KES 2,000 fine on an individual return is the familiar case — even though the tax itself was paid. For those, there’s nothing to apply for. File what’s outstanding, and once the system confirms no principal is owed, the penalty clears on its own.
The hardware retailer’s situation was the harder version: real principal, accumulated over two years, without enough cash on hand to clear it at once.
Two traps that aren’t obvious until they cost you
Through iTax’s amnesty application, a business proposes a number of instalments and a frequency, and the system calculates what each payment looks like. In practice, plans tend to run around six months, in line with the amnesty window itself — KRA hasn’t published a hard cap either way. But the deadline doesn’t bend for the plan: whatever the schedule says, the full principal must be paid by December 31, 2026, or the waiver on that debt is lost.
Partial payment doesn’t earn a partial waiver. The relief only activates once the full principal for a given period is cleared — not proportionally as instalments come in.
The second trap is less obvious, and more consequential. A business on a historical repayment plan is still required to file and pay every current obligation on schedule — PAYE by the 9th, VAT by the 20th, instalment tax on its quarterly dates. Fall behind on 2026 filings while paying down 2024 debt, and the new arrears can disqualify the business from the amnesty entirely, even after months of faithful instalments.
In practice, the programme isn’t really “clear the old debt.” It’s “clear the old debt while staying spotless on everything new.”
For the hardware retailer, none of the figure was in dispute — the VAT had genuinely gone unpaid. That’s not universal. Ledger errors happen: duplicated assessments, an amended return that never updated the balance, an old dispute resolved informally but never closed out in the system. Because paying principal is treated as final, a business that doubts its figure should raise it before paying, not after. For debt already before the Tax Appeals Tribunal, KRA is pointing taxpayers toward Alternative Dispute Resolution instead — a route that lets the principal be settled inside the amnesty window without waiting for the dispute to run its course. Debt already in court is excluded from the programme altogether.
What’s actually at stake
The retailer settled on a six-month plan, filed the missing return that had been holding up an accurate ledger figure, and made the first instalment in late July. The immediate win was the 180,000 they won’t end up paying. The less obvious one came up almost as an afterthought: once the principal clears and filings are current for three years back, the business can apply for a fresh Tax Compliance Certificate — usually issued within 24 to 48 hours, valid for a year, and the actual document that tenders, bank facilities, and immigration paperwork tend to ask for.
Debt left unresolved past December 31, 2026 goes back to accruing penalties and interest as normal from January 1, 2027, and KRA has said enforcement — including debt recovery proceedings — will resume against taxpayers who didn’t use the window. Combined with the law’s insistence that this relief is granted once, waiting for a better moment isn’t really a strategy anymore.
The one piece of advice showing up consistently from people who’ve been through this before: don’t leave it for December. iTax has slowed to a crawl in the final weeks of past amnesty rounds, and a plan approved in November still needs its principal cleared by the same deadline as one approved in July.
Below, you’ll find a step-by-step guide on how to apply for the waiver.
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