Treasury Cabinet Secretary John Mbadi has unveiled proposals to revise tax filing timelines, introducing new deadlines that could significantly change how Kenyans submit their annual returns.
Under the proposed changes, individuals filing nil returns will be required to submit their declarations within one month after the end of the income year. The move is intended to give the Kenya Revenue Authority (KRA) more time to review and verify submissions.
Speaking while presenting the 2026/27 Budget Statement in Parliament, Mbadi also proposed that salaried individuals whose income is fully taxed at source will have up to four months after the end of the income year to file their returns. If approved, the new timelines will replace the current system, where all taxpayers, regardless of income category, are required to file returns by June 30 each year. According to Mbadi, the reforms are aimed at enhancing compliance and improving the efficiency of tax administration.
Currently, the June 30 deadline for all taxpayers leaves limited time for proper verification and validation before the next financial year begins
CS MbadiThe changes are expected to affect millions of Kenyans, particularly those who file nil returns annually as part of compliance requirements. The revised filing timelines form part of a broader set of tax administration reforms outlined in the 2026/27 budget. Mbadi emphasized that the government has opted against introducing new taxes or increasing existing rates, instead focusing on improving collection systems and expanding the tax base.
In addition, the Treasury is proposing measures to tax gains from offshore transactions involving Kenyan assets. Mbadi noted that some transactions structured through foreign entities currently escape taxation under existing laws. The government also plans to curb prolonged profit retention by companies, proposing a minimum deemed dividend distribution threshold of 60 per cent of undistributed income. This is aimed at discouraging firms from delaying dividend payouts to avoid taxation.
Further proposals include clarifying the taxation of software-related payments, interchange fees, and merchant service charges, reflecting the growth of digital and cross-border transactions. The Treasury is also targeting income from betting and gaming, proposing the introduction of withholding tax on winnings from gambling, lotteries, and prize competitions.
Mbadi noted that while gambling activities are legal and rapidly expanding, the income generated should be taxed like any other earnings.
