Stakeholders appearing before the National Assembly Departmental Committee on Finance and National Planning have largely welcomed the government’s proposal to introduce a new tax amnesty programme under the Finance Bill, 2026, describing it as a significant relief measure for businesses burdened by outstanding tax liabilities.
The proposed amnesty targets tax liabilities accrued up to December 31, 2025, and offers taxpayers full waiver of penalties and interest on condition that they settle the principal tax amount by December 31, 2026.
However, business groups and tax experts urged lawmakers to extend the amnesty period to June 30, 2027, arguing that businesses require more time to mobilise resources and restructure their finances.
“This would allow businesses to use two full fiscal cycles to organise the capital required to clear outstanding principal liabilities,” stakeholders submitted to the Committee chaired by Molo MP Kuria Kimani.
While supporting the initiative, stakeholders warned that the current implementation timelines could create severe liquidity pressures for companies still recovering from recent economic shocks.
The Kenya Private Sector Alliance (KEPSA), which represents more than two million businesses, praised the proposal as a strategic fiscal intervention that would encourage business formalisation and voluntary tax compliance.
“KEPSA is highly appreciative of the collaborative wins realised in the Finance Bill 2026. These positive inclusions are the direct result of sustained private-sector advocacy through structured engagement, policy dialogue, and evidence-based submissions to the National Treasury and the National Assembly,” the alliance told lawmakers.
ALSO READ:
Fortune Sacco rolls out member engagement drive at Nairobi branch
According to KEPSA, the tax amnesty demonstrates the government’s commitment to creating a more supportive business environment. However, the organisation cautioned that the December 31, 2026 deadline may create what it termed an “unnatural liquidity trap” for firms with substantial principal tax debts but limited operational cash flow.
Tax advisory firm Grant Thornton Taxation Services also supported the proposal but called for amendments to establish a more predictable framework for the remission of penalties and interest once taxpayers settle their principal tax obligations.
Samuel Mwaura, Tax Partner at Grant Thornton, said extending the deadline to June 30, 2027 would improve compliance and provide businesses with adequate time to honour their commitments sustainably.
“While the extension of the amnesty period is commendable as it encourages settlement of outstanding principal taxes and provides relief from accumulated penalties and interest, repeated short-term extensions may create uncertainty for taxpayers,” Mwaura noted.
The firm further proposed the creation of a long-term and transparent framework under the Tax Procedures Act to guide future remission of penalties and interest for taxpayers who voluntarily settle principal taxes.
Stakeholders also raised concerns over proposals in the Finance Bill to significantly shorten income tax return filing timelines.
Under the current framework, individuals and corporations are allowed six months after the end of the financial year to file returns.
The Bill proposes reducing this period to four months, effectively moving the filing deadline for companies operating on a calendar financial year from June 30 to April 30.
In addition, the Bill proposes that nil returns be filed within one month after the close of the income year.
Business groups warned that the compressed timelines could create major compliance challenges, particularly for multinational corporations and large firms whose financial audits often take up to five months to complete.
They argued that the proposed deadlines could overwhelm taxpayers and increase the risk of non-compliance instead of improving revenue collection efficiency.
By Obegi Malack
Get more stories from our website: Sacco Review.
For comments and clarifications, write to: Saccoreview@
Kindly follow us via our social media pages on Facebook: Sacco Review Newspaper for timely updates
Stay ahead of the pack! Grab the latest Sacco Review newspaper!
