Taxpayers will now be empowered to amend and approve income tax returns pre-populated by the Kenya Revenue Authority (KRA), marking a major win for Kenyans in the Finance Bill 2026.
Pre-population of income tax returns took effect on January 1, 2026. The process allows KRA to use alternative sources of data, including withholding tax certificates, customs duty data and third-party information such as bank statements, to determine a taxpayer’s income and tax liability.
Currently, taxpayers are unable to amend tax liabilities captured in KRA pre-populated returns, leaving them vulnerable to assessments that may overstate their obligations to the tax authority and threaten business viability.
Clause 48 of the Finance Bill 2026, which proposes to amend Section 75 of the Tax Procedures Act, was further amended on June 18, 2026, during the Committee of the Whole House stage to provide safeguards for taxpayers where KRA relies on pre-populated data.
Taxpayer safeguards
“The Commissioner shall notify the person that a pre-populated return has been issued. The pre-populated return shall be issued on or before the end of January of each year of income to the person expected to lodge the return. A person issued with a pre-populated return may confirm or amend the pre-populated return within two months from the date the pre-populated return is issued by the Commissioner,” the amended Clause 48 of the Finance Bill 2026, as adopted by the National Assembly, states.
Pre-population of income tax returns has been significantly enabled by the mandatory issuance of eTIMS invoices in line with Section 23A of the Tax Procedures Act and Section 16(1)(c) of the Income Tax Act, which provides that deductible expenses must be supported by eTIMS invoices.
According to the National Assembly’s Finance and Planning Committee, the amendment empowering taxpayers to amend pre-populated income tax returns is intended to provide a safeguard against sweeping assessments that undermine tax justice.
“Where we have instances of pre-populated returns, whereas we agree that we need to leverage technology for tax administration, we are also putting the obligation on the Revenue Authority that it will have to give the taxpayer a chance to amend the pre-populated returns. This is meant to ensure that we don’t have the Authority coming for everyone and giving fictitious assessments which the taxpayer is not able to amend,” Finance and Planning Committee Chairperson Kuria Kimani told the National Assembly.
Data visibility
According to KRA, the Income and Expenses Validation exercise, which enabled the pre-population of income tax returns from January 1, 2026, has been pivotal in enhancing visibility and widening the tax base.
“Just looking at this year alone. From people who have never before paid a single shilling in direct taxes, by now they have paid Sh7.8 billion. This is just 97,000 taxpayers who have come forward voluntarily following income and expenses validation,” KRA Commissioner for Micro and Small Taxpayers George Obell said.
The National Assembly further amended the Finance Bill 2026 to require KRA to provide taxpayers with a written explanation of how an assessment was arrived at where they are deemed to have engaged in tax avoidance.
“The Commissioner shall issue a person determined to have entered into or carried out a tax avoidance scheme written reasons for the determination made within thirty days of the determination,” the adopted version of the Finance Bill 2026 states in Clause 41, which amends Section 18 of the Tax Procedures Act.
