Tax amnesty under the Finance Act, 2026: what to do and by when

The Finance Act, 2026 revived the amnesty in section 37E of the Tax Procedures Act by moving its dates forward. It wipes out 100% of the penalties, interest and fines sitting on tax debts that accrued up to 31 December 2025, as long as the principal tax behind them is cleared inside the amnesty window. The window opened on 1 July 2026 and closes on 31 December 2026. Two routes exist. If you already cleared the principal, the waiver comes automatically. If principal is still outstanding, you pay it as a lump sum or under a payment plan that finishes by 31 December 2026.

Who this is for

This applies to you if you carry penalties or interest on any tax head for periods up to 31 December 2025, whether you file as an individual or a company.

It does not apply to liabilities arising on or after 1 January 2026. Those stay payable in full, principal, penalties and interest.

Stop and call a tax professional if any of the following is true:

• Part of the debt sits under objection, appeal or active litigation. The amnesty does not settle a dispute. Disputed amounts go through the Alternative Dispute Resolution framework first, and only then can the amnesty apply to what is agreed.
• You are under an ongoing audit or hold an assessment you disagree with.
• The exposure involves customs, transfer pricing, or related-party transactions.
• You cannot tell from your ledger which periods the penalties belong to.

Before you start, gather these

• The tax heads and periods where you carry penalties or interest.
• Confirmation that every return for those periods has been filed, nil returns included.
• Whether any part of the debt sits under objection, appeal or ADR.
• Whether you can pay the principal in one sum, or need instalments.
• Your iTax login, with your registration details current.

The method, step by step

1. Log into iTax and download your statement of account for every obligation you hold. Work from the ledger, not from memory. What you believe you owe and what KRA has recorded rarely match.

2. Split the ledger by period. Put everything that accrued up to 31 December 2025 on one side and anything arising on or after 1 January 2026 on the other. The amnesty reaches only the first group. Every figure after this step depends on getting the split right.

3. Read the period, not the charge date. A penalty raised in 2026 against a 2024 obligation belongs to the 2024 period and qualifies. The date the penalty appeared on your ledger does not decide the matter.

4. Within the qualifying periods, separate the principal tax from the penalties and interest. The principal is what you must pay. The penalties and interest are what gets waived.

5. File every outstanding return for the qualifying periods before you do anything else. Where no principal tax is due, the late filing penalty waiver follows automatically once your returns are complete. Apply for anything before the returns are in and you leave penalties on the ledger with nothing for the waiver to attach to.

6. If you cleared the principal by 31 December 2025, stop here. The waiver is automatic and no application is required. Watch the ledger and confirm the penalties come off.

7. If principal remains, choose between a lump sum and instalments. Paying the full outstanding principal in one sum triggers the waiver on the corresponding penalties and interest immediately.

8. For instalments, apply on iTax for a structured payment plan and schedule it so that all the principal clears by 31 December 2026. Build slack into the schedule. A plan that lands on the last week leaves you no room if a payment fails.

9. Reconcile before you treat the matter as closed. The qualifying principal you computed should tie to the ledger, the payment schedule should finish before 31 December 2026, and you should know what you still owe outside the amnesty.

10. Once the waiver posts, download and keep the ledger. That download is your evidence that the penalties came off.

The traps

• Reading the amnesty by charge date instead of period. People assume a penalty raised in 2026 falls outside the amnesty and pay it. It qualifies if the underlying period does.
• Applying before the returns are filed. The waiver has nothing to attach to, and you end up paying penalties that would have been forgiven.
• A payment plan that runs past 31 December 2026. Any principal unpaid on that date pulls the penalties and interest back onto your ledger in full. The relief is conditional, not granted up front.
• Assuming the amnesty ends a dispute. It does not. A disputed assessment stays disputed, and the ADR route runs on its own timetable.
• Waiting for December. Portal load and turnaround times at year end are the most common reason a taxpayer misses a window that was open for six months.
• Mixing post-2025 debt into the plan. Liabilities from 1 January 2026 onward carry their own penalties and interest and belong in a separate settlement.

Rates, thresholds and deadlines

What	Value	Source
Debts covered	Accrued up to 31 December 2025	s.37E TPA as amended by Finance Act, 2026 s.45
Relief granted	100% of penalties, interest and fines	KRA press release, 3 July 2026
Window opens	1 July 2026	Finance Act, 2026 s.1(c); KRA press release, 3 July 2026
Deadline to clear all principal	31 December 2026	s.37E(3)(b) TPA as amended by Finance Act, 2026 s.45
Excluded	Liabilities arising on or after 1 January 2026	KRA press release, 3 July 2026
Automatic waiver, no application	Principal cleared by 31 December 2025	KRA press release, 3 July 2026
Payment plan channel	KRA iTax	KRA press release, 3 July 2026

Sources

• Tax Procedures Act (Cap. 469B), section 37E, as amended by section 45 of the Finance Act, 2026 (No. 19 of 2026).
• Finance Act, 2026 (No. 19 of 2026), section 1(c), commencement 1 July 2026.
• KRA press release, "Re-introduction of Tax Amnesty Programme for Interest Penalties and Fines", 3 July 2026.

Contributed by Julian Njoroge Maina, 25241.