Missing a tax deadline in Kenya can cost more than the tax itself. KRA applies three separate charges, and they can all apply at once. Understanding each one helps you decide what to pay first when you are behind, and how to keep it from happening again.

The three charges

  1. Late filing penalty. Charged when a return is filed after its due date. For most tax heads it is the higher of a percentage of the tax due or a fixed minimum amount, and the minimum differs between individuals and companies.
  2. Late payment penalty. Charged on tax that was not paid by the due date, as a percentage of the unpaid tax.
  3. Late payment interest. Charged at 1% a month on the unpaid tax until it is paid in full. Part of a month counts as a whole month, so a payment a day late can attract a full month's interest.

The exact percentages and minimums depend on the tax head, such as income tax, PAYE, VAT, turnover tax or monthly rental income, and they are changed by Finance Acts. The KRA penalty calculator applies the current figures for each head and shows the three charges separately, so you can see which one is largest.

Why the minimum matters

A small business with little tax to pay can still face a fixed minimum penalty for filing late. For that reason a late nil return can cost far more than the tax it reports. Read nil returns explained to see why filing on time, even with nothing to pay, is the cheaper choice.

What to do if you are already late

  • File first. Filing stops the late filing penalty from growing and is required before you can settle the account.
  • Pay what you can. Interest runs on unpaid tax, so paying part of it reduces the interest.
  • Ask about a payment plan or waiver. KRA can agree instalment arrangements and, in some cases, waive penalties and interest during an amnesty. Check the current amnesty terms on KRA's website.
  • Keep the proof. Save the payment receipts. The free tax payments log keeps them in one place.

How to avoid penalties

A calendar prevents most late filing. Put the key dates in one place, such as the KRA filing and payment calendar and our guide to the 30 June tax deadline. Typical monthly dates are:

Employers can track payroll dates with the statutory remittance tracker, and companies that pay instalments can plan them with the instalment tax planner and the instalment tax calculator.

Check your own situation

Each tax head has its own penalty schedule, and penalties increase when a default is repeated. If you are in doubt about what applies to you, ask a registered tax agent. Our contact page is also open for questions about the calculators.

Do not rely on a blog post for the final figure. Confirm penalties and any amnesty with KRA before you pay.

Common questions

Do penalties apply if I have no tax to pay? Late filing penalties can still apply to a return with no tax due, which is why even nil returns should be filed on time. The penalty is often a fixed minimum rather than a percentage.

Can penalties be waived? KRA can waive penalties and interest in some circumstances, for example during a tax amnesty or where you show reasonable cause. Apply in writing with evidence and pay the principal tax.

How is interest calculated? Interest is charged each month, or part of a month, on the tax still unpaid, at the monthly rate in the Tax Procedures Act. It keeps running until the tax is paid, whether or not the return has been filed.