Stakeholders Back Tax Amnesty in Finance Bill 2026, Seek Extended Deadlines

Stakeholders appearing before the National Assembly Departmental Committee on Finance and National Planning have broadly supported the government’s proposal to introduce a new tax amnesty programme under the Finance Bill, 2026.

However, those who submitted proposals to the Committee urged lawmakers to review key compliance deadlines and address restrictive provisions surrounding overpaid tax refunds, warning that failure to do so could trigger a liquidity crisis for businesses.

The proposed tax amnesty programme targets tax liabilities accrued up to December 31, 2025, and offers taxpayers full relief from penalties and interest, provided they settle the principal tax amount by December 31, 2026.

Stakeholders, however, appealed to the Committee to consider extending the amnesty period to June 30, 2027, arguing that the additional time would enable businesses to organise the capital needed to clear outstanding liabilities.

“This would allow businesses to use two full fiscal cycles to organise the capital required to clear outstanding principal liabilities,” stakeholders submitted before the Committee.

While describing the initiative as a major step towards easing commercial financial pressure and cleaning up corporate ledgers, stakeholders raised concerns over what they termed as tight implementation timelines and aggressive statutory changes.

The Kenya Private Sector Alliance (KEPSA), which represents more than two million businesses, praised the proposal, describing it as a strategic fiscal intervention that provides companies with a pathway to formalisation and voluntary tax compliance.

“KEPSA is highly appreciative of the collaborative wins realised in the Finance Bill 2026. These positive inclusions are the direct result of sustained private-sector advocacy through structured engagement, policy dialogue, and evidence-based submissions to the National Treasury and the National Assembly,” the alliance told lawmakers.

KEPSA noted that provisions such as the proposed tax amnesty demonstrated the government’s commitment to creating a conducive business environment.

Despite supporting the proposal, the alliance warned that the December 31, 2026 deadline could create financial strain for businesses still recovering from economic shocks.

According to KEPSA, many enterprises carry substantial principal tax debts but lack the operational cash flow required to settle them within a single calendar year.

Tax advisory firm Grant Thornton also backed the proposal but called for enhancements to create a more predictable framework for the remission of penalties and interest after payment of principal taxes.

The firm proposed extending the deadline to June 30, 2027.

“While the extension of the amnesty period is commendable as it encourages settlement of outstanding principal taxes and provides relief from accumulated penalties and interest, repeated short-term extensions may create uncertainty for taxpayers,” said Samuel Mwaura, Tax Partner at Grant Thornton Taxation Services.

The firm added that a long-term framework under the Tax Procedures Act should be considered to provide clarity on the remission of penalties and interest for taxpayers who voluntarily settle principal taxes.

“The proposed tax amnesty is a highly commendable move that will assist taxpayers in cleaning up their ledgers and regularising past omissions without the burden of punitive historical penalties,” Grant Thornton submitted.

However, the firm cautioned that the current timeline was too short.

“To maximise compliance and ensure that corporations can sustainably honour these commitments, the amnesty programme needs to be extended to provide businesses breathing room to restructure their debts,” the advisory firm stated.

Beyond the amnesty programme, stakeholders raised concerns over proposals in the Finance Bill seeking to shorten the annual income tax return filing deadline.

Currently, individuals and corporations are allowed six months after the end of the income year to file returns. However, the Bill proposes reducing the timeline to four months, setting April 30 as the deadline instead of June 30 for companies operating on a calendar financial year.

The Bill also proposes that nil returns be filed within one month after the close of the income year.

Stakeholders warned that the shortened timelines could create operational challenges, particularly for multinational firms and large corporations whose financial audits often take up to five months to conclude.

“While fixed deadlines offer certainty, a four-month window is insufficient for many taxpayers. Preparing tax returns depends heavily on finalising audited financial statements, which requires completing audits, resolving queries, and obtaining board approvals,” KEPSA explained.

The alliance added that businesses in regulated sectors face additional statutory obligations, making compliance within the proposed timelines difficult.

“Forcing an accelerated timeline would compel businesses to file based on unaudited or estimated data, leading to frequent amendments and undermining the accuracy of tax reporting. The one-month deadline for nil returns is similarly impractical,” a KEPSA representative told the Committee.

Committee members, however, questioned the stakeholders’ objections to the proposed timelines, signalling further debate over the provisions in the Finance Bill, 2026.