Hundreds of thousands of taxpayers are under fresh scrutiny after the tax authority detected income activity linked to PINs that were used to file nil returns.
The Kenya Revenue Authority (KRA) has begun sending SMS alerts to individuals and companies whose records show transactions despite declaring zero income in 2024.
The authority says its system has already prepopulated its 2025 income tax returns on the iTax portal using available electronic data.
In the message sent to affected taxpayers, KRA states:
“Records indicate that while you filed a Nil Income Tax Return for 2024, you earned income in 2025 as evidenced by your eTIMS transmissions. Consequently, your pre-populated 2025 Income Tax Return is ready for filing. Please log in to iTax to file your return and pay any tax due.”
Internal checks show that 392,162 taxpayers were flagged after reviews established that they had financial activity linked to their PINs. In many cases, the income trail appeared through withholding tax deductions, customs import entries or invoices submitted through the Electronic Tax Invoice Management System (eTIMS).
KRA’s upgraded system now draws information from eTIMS, withholding income tax data and customs records to automatically generate draft returns.
Taxpayers are required to log in to iTax, review the prefilled figures and submit the return. If income appears that was not declared earlier, they are expected to explain the variance and pay the tax due.
The move follows a public notice issued by KRA on November 10, 2025, announcing tougher validation rules.
“Effective 1st January 2026, it will begin validating income and expenses declared in both individual and non-individual income tax returns against the following data sources: 1) TIMS/eTIMS, 2) Withholding Income Tax gross, 3) Import records from Customs,” the notice stated.
Instant validation
Under the new system, validation happens instantly when a return is filed. Declared income and expenses are checked against electronic records already in KRA’s database. If there is a mismatch, the authority says it will rely on the higher verified amount when assessing undeclared income.
All deductible expenses must be backed by valid eTIMS invoices that were properly transmitted, including the buyer’s PIN where required. Expenses that do not have matching records risk being disallowed unless they fall under specific exemptions.
Some exemptions are provided under Section 23A of the Tax Procedures Act and the 2024 Electronic Tax Invoice Regulations. They include salaries and wages, imports, interest income, investment allowances, airline tickets and income subject to final withholding tax.
The crackdown covers a wide range of taxpayers. Employees with side hustles must declare all income in a single return, including freelance work, consultancy, online sales, farming and rental income. Employment income must be supported by a P9 form.
Sole proprietors, landlords, professionals, partnerships and Turnover Tax payers are also affected. Individuals earning income outside the Turnover Tax framework are required to declare it under the appropriate tax head.
KRA recently reinstated the option to file nil returns after system upgrades but introduced tighter controls. From April 2026, automated checks will be applied to nil filings for the 2025 year of income to prevent false declarations.
Previously, discrepancies were often picked up later during audits. With the new system, checks are done at the point of filing, limiting room for corrections after submission. KRA says the reforms are meant to improve compliance and ensure taxes due are paid in full.
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