Kenya Revenue Authority Pauses Nil Return Filing for System Data Validation

The Kenya Revenue Authority (KRA) has temporarily disabled the option for taxpayers to file nil returns on its iTax platform. According to an advisory issued by the tax authority on Friday, January 23, 2026, the service is scheduled to remain unavailable until May 1, 2026. This move is part of a broader transition toward an automated tax return system that relies on data integration rather than manual declarations.

The suspension follows reports from taxpayers who were unable to submit nil returns for the 2025 year of income during the first month of the new year. KRA officials stated that the pause is necessary to allow for the validation of income and expenses against data residing in the Electronic Tax Information Management System (eTIMS). By matching iTax accounts with eTIMS receipts, withholding tax records, and customs data, the authority aims to identify individuals and businesses that may have participated in taxable transactions despite declaring zero income.

For the construction industry, this policy shift carries practical implications for independent contractors, specialized sub-contractors, and small-scale developers who have historically filed nil returns during periods of project downtime. The integration of eTIMS means that any procurement of building materials, equipment leasing, or professional consultancy services that generate an electronic tax invoice will be flagged. If a contractor has issued or received eTIMS-compliant invoices during the year, the system will prevent the filing of a nil return, requiring instead a full declaration of the financial activity captured in the national database.

Patience Njau, the KRA Deputy Commissioner for Taxpayer Services, noted that the authority is using this window to turn previous nil filers into active taxpayers where data suggests gainful economic activity. She indicated that the taxman is specifically looking at the informal sector and individuals with rental income who may not be fully compliant. In the previous fiscal cycle, approximately 12 million Kenyans filed nil returns, a figure the KRA intends to reduce through more rigorous data matching.

Under the new framework that took effect on January 1, 2026, individual and non-individual income tax returns are being prepopulated with information from government databases. This shift mirrors international standards intended to simplify compliance for salaried workers while making it more difficult for active businesses to bypass the tax net. Taxpayers who only earn income through regular employment will eventually see their returns automated based on PAYE data, eliminating the need for manual P9 form entries.

The suspension has raised concerns among those who are genuinely without income, such as students or unemployed individuals with active KRA PINs, who must still meet their legal obligation to file annually to avoid penalties. The KRA has assured the public that the nil filing option will be restored once the review of 2025 data is complete. Taxpayers are being urged to ensure their records are reconciled with eTIMS data before the May deadline to avoid discrepancies that could lead to the rejection of nil returns or the assessment of back taxes and penalties.

The authority has also introduced digital support tools, including a chatbot on WhatsApp, to assist users with the evolving iTax requirements. As the May 1 restoration date approaches, the KRA expects the data-driven approach to ensure a more equitable distribution of the tax burden across both the formal and informal sectors of the economy.