The Kenya Revenue Authority (KRA) has reinstated the option for taxpayers to file ‘Nil Returns,’ ending a weeks-long suspension that unsettled individual taxpayers and small businesses. Kenya Revenue Authority help desks. In a statement issued on Friday, the KRA’s Business Strategy, Technology and Enterprise Modernisation Department confirmed that the necessary system validations have been embedded.This allows the nil filing feature to return for the January-December 2025 income tax return cycle. The restoration is part of a broader compliance drive leveraging the eTIMS system to prepopulate returns with third-party data. This is meant to make it harder for taxpayers with visible transactions to falsely declare zero income. KRA officials revealed that the suspension was necessary after identifying over 392,000 taxpayers who had taxes withheld from their income in 2025 but still filed nil returns for 2024, indicating systemic misuse. Why did KRA suspend and then restore the nil filing option? The temporary suspension in January was a technical measure to allow the KRA to upgrade its iTax system with enhanced validation checks. According to Commissioner for Micro and Small Taxpayers George Obell, the authority discovered widespread abuse where taxpayers with recorded transactions and withholding tax deductions were still declaring nil income. A major misconception identified was taxpayers treating withholding tax—deducted at source for services like management fees (5%) or contracts (3%)—as a final tax, when it is actually an advance payment.
“The Nil Filing return option has been reinstated after the necessary system validations have been embedded for the 2025 returns to be filed after March 31, 2026,” the KRA stated. How will the new system prevent abuse of nil returns? The core change is the activation of prepopulated income tax returns. KRA’s system will now automatically populate a taxpayer’s returns with income already data collected from the electronic Tax Invoice Management System (eTIMS), withholding tax certificates, and import documents. “This time, when we say we are prepopulating returns, that income will already have been captured by the time the taxpayer is seeing the return, and one will not be able to avoid it,” commissioner Obell explained. Taxpayers logging into iTax will see this prepopulated data and must either accept it or engage the KRA to correct it. Failure to engage after seeing prepopulated income could trigger audits for the current and preceding years. KRA has adopted a new data-driven enforcement approach to enhance tax compliance. What are the ongoing compliance obligations for taxpayers? The KRA emphasised that the reinstatement applies specifically to 2025 income returns filed after the March 31 deadline. All other obligations remain unchanged. “Filing for 2024 income tax returns and prior periods, and other monthly obligations like PAYE, excise, Monthly Rental Income (MRI), and Turnover Tax (TOT), etc., can proceed as before,” the authority clarified as reported by Business Daily. Taxpayers are also advised to verify their Personal Identification Numbers (PINs) on iTax to ensure accuracy as the system becomes more integrated. This move coincides with the KRA’s Income and Expenditure Verification programme, which launched on January 1, 2026. The program cross-references declared figures with data from multiple sources to identify discrepancies. Deputy Commissioner Patience Njau stated the focus for this year is to “convert Nil filers, non-filers, and zero payers into compliant taxpayers.” The overarching goal is to expand the tax base by leveraging technology, particularly eTIMS, which creates a digital trail for nearly all business transactions, giving KRA unprecedented visibility into the economy.
By Elijah Ntongai
