What Has Changed?
The Finance Act, 2026 introduced Section 29A, giving the Commissioner power to originate a tax assessment based on information available to the Kenya Revenue Authority (KRA).
The information may come from sources such as:
- Tax returns.
- Withholding tax records.
- Electronic systems.
- Audit and inspection findings.
- Information obtained under other laws.
- Third-party data.
What Does This Mean?
Previously, tax assessments were generally linked to specific taxpayer circumstances, such as failure to file a return or inaccuracies identified in a filed return.
Under Section 29A, the Commissioner can originate an assessment independently using available information, without first requiring a specific taxpayer action.
This means information already held by KRA or obtained from other lawful sources may be used as the basis for an assessment where the Commissioner considers it relevant to the taxpayer’s position.
Important Taxpayer Safeguards
The Finance Act, 2026 also introduced procedural safeguards.
Before issuing an assessment, the Commissioner may request additional information from the taxpayer in writing at least 30 days before the assessment.
This gives the taxpayer an opportunity to:
- Provide clarification.
- Submit additional information.
- Reconcile differences.
- Explain their tax position.
A taxpayer also retains the right to object to an assessment under Section 51 of the Tax Procedures Act.
What Should Taxpayers Do?
Taxpayers should keep their tax records accurate, complete and up to date. Regularly reconcile:
- Sales and purchases.
- VAT returns.
- Withholding tax.
- PAYE.
- Income tax returns.
- eTIMS records.
- Bank and accounting records.
Data reported to different systems should be consistent because KRA may use information from multiple sources when determining tax liabilities.
Key Takeaway
Tax compliance is increasingly becoming data-driven.
Businesses and individuals should not only file returns on time; they should also ensure that information across their tax, accounting, banking and electronic records is accurate and consistent.
Source: Finance Act, 2026 — Section 29A, Tax Procedures Act, Cap. 469B.
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