The Kenya Revenue Authority (KRA) has officially reinstated the option to file Nil Returns on iTax, but with a catch.
Starting April 1, 2026, every nil declaration submitted for the 2025 tax year will undergo validation via a new automated system. The move follows a brief suspension of nil returns in January 2026 that caused widespread concern among citizens with genuinely zero income.
KRA data recently revealed that nearly 400,000 taxpayers declared nil income in 2024 despite having taxes withheld from their earnings. Many of these individuals, largely consultants and contractors, mistakenly believed that withholding tax (usually 3% to 5%) served as a final tax.
KRA’s new Income and Expenditure Verification program pulls data from a variety of interconnected sources to build a financial profile of every taxpayer:
- eTIMS & Withholding Data: The system automatically prepopulates tax returns with income already captured through electronic invoices and withholding certificates.
- Third-Party Integration: The tech scans records from the National Transport and Safety Authority (NTSA) for vehicle registrations, customs records for imports, and mobile money platforms for cash flow.
- Lifestyle Audits: If a taxpayer clears a luxury vehicle through customs or travels frequently abroad while declaring zero income, the algorithm flags the mismatch immediately.
Unlike previous years where a taxpayer might wait months for an audit, the new system performs these checks at the point of filing. If the data doesn’t match, the taxpayer is flagged for an immediate review.
The consequences for dishonest filing are steep. Beyond the standard late filing penalty of Ksh. 2,000, taxpayers found to have under-declared income face upward tax adjustments with a 1% monthly interest rate. Furthermore, non-compliance could lead to the denial of Tax Compliance Certificates (TCC), which are essential for government tenders and bank loans.
For those with genuinely no income, nil filing remains a legal and available option for the 2024 period and earlier.