KRA Blocks Nil Tax Filings in Major Push to Widen Tax Net

The Kenya Revenue Authority has thrown down the gauntlet to millions of registered taxpayers who routinely declare zero income, blocking nil tax return filings until May in an aggressive move to convert non-compliant individuals and businesses into active revenue contributors.

The unprecedented suspension, announced Friday by Deputy Commissioner for Taxpayer Experience Patience Njau, exposes a glaring disparity in Kenya’s tax system: of 22 million registered Personal Identification Number holders, only eight million actively file returns, with a mere four million consistently paying taxes.

That leaves a country of 50 million people dependent on less than one percent of its population to shoulder the tax burden, a skewed reality KRA now intends to correct through what officials describe as the most comprehensive data validation exercise in the authority’s history.

“This year, our focus will be very different as we aim to convert nil and non-filers and zero payers into paying taxpayers,” Njau said during a press briefing that sent ripples through tax advisory circles. “We have systems in place to monitor other transactions, such as withholding tax, income earned, eTIMS, and customs, among others.”

The suspension runs until May 1, giving KRA nearly four months to cross-check declared nil returns against a growing arsenal of digital records.

The taxman will scrutinize eTIMS invoices, withholding tax submissions, employment income data, financial transmission records and customs declarations to identify taxpayers earning income but declaring none.

For taxpayers who attempted to file nil returns this week, the message was blunt. “Kindly note the Nil return option is temporarily unavailable. Kindly be patient as it is scheduled to be restored on May 1st,” KRA responded to queries on social media platform X.

The timing creates a squeeze: with the statutory filing deadline still June 30, taxpayers accustomed to filing early now face a compressed window and heightened scrutiny. KRA insists this is deliberate.

“Between now and the end of March, you cannot file nil returns for your 2025 income,” Njau explained. “Nil filing will be reopened once we have reviewed the data and confirmed that no transactions occurred during the year. This is meant to ensure that the tax burden is shared more fairly.”

The enforcement drive arrives against a backdrop of record revenue collection. In December alone, KRA netted 251.52 billion shillings, the highest monthly haul in its 30-year history, representing 15.88 percent year-on-year growth. For the full 2024/25 financial year, the authority collected 2.57 trillion shillings, growing revenue by 6.8 percent despite economic headwinds.

But KRA argues the impressive figures mask systemic inequity. Salaried workers captured through Pay As You Earn deductions account for the bulk of compliant taxpayers, while vast swathes of the informal economy, rental income earners and businesses operating below the radar continue to evade their obligations.

The authority has rolled out complementary measures to tighten the net. Starting this January, KRA began automated validation of all income and expenses declared in tax returns against internal data sources. Claims that cannot be verified electronically through eTIMS invoices, withholding tax records or customs data face disallowance.

A “Special Table” system now restricts persistent nil filers, businesses that have failed to file VAT returns for six months, traders without eTIMS compliance and operators engaged in schemes such as claiming fictitious input tax from submitting returns until they regularize their records.

The deadline for businesses to adopt eTIMS and resolve outstanding compliance issues is March 31. Entities that fail to comply risk deregistration or penalties. More than 100,000 businesses currently face deregistration for VAT non-compliance alone, according to KRA data.

The authority has attempted to soften the blow with taxpayer-friendly initiatives. Commissioner General Humphrey Wattanga announced a WhatsApp chatbot offering 15 services, including tax filing assistance, available 24/7 through the number +254 711 099 999. KRA has also introduced automated payment plans allowing taxpayers to clear outstanding liabilities, including penalties and interest, through structured instalments of up to six months.

“We are shifting toward data-driven enforcement aimed at distinguishing between inadvertent non-compliance and deliberate tax evasion,” Njau said.

The move reflects KRA’s growing technological sophistication. The Electronic Tax Invoice Management System, fully rolled out in 2023, now provides real-time visibility into business transactions. Integration with banks, telecommunications firms, insurance companies and utility providers gives the taxman unprecedented access to taxpayer financial footprints.

For genuine nil filers, those truly without taxable income, students, unemployed individuals or those below the 24,000 shilling monthly threshold, KRA maintains they remain legally permitted to submit nil returns once validation exercises conclude. But they may need to provide supporting documents such as bank statements or affidavits to prove their status.

Tax advisors warn clients to prepare for heightened scrutiny. “The days of filing nil returns as a default compliance measure are over,” said one Nairobi-based tax consultant who requested anonymity. “KRA now has the tools to see everything. If you earned income, they will find it.”

The suspension comes as KRA pursues an ambitious 2.968 trillion shilling collection target for the 2025/26 financial year, representing 15.4 percent growth. To hit that number, the authority needs every registered taxpayer paying their fair share.

Whether the hardline approach succeeds in widening the tax base or simply pushes more economic activity underground remains to be seen. What is clear is that the era of easy nil returns has ended, and millions of Kenyans now face a reckoning with the taxman.