The document is an updated version of the Tax Procedures Act, incorporating significant procedural changes introduced by the Finance Act 2025. This Act serves as the uniform framework for the administration of all tax laws in Kenya (Income Tax, VAT, Excise Duty, etc.), with a new emphasis on digital integration, expanded enforcement powers, and dispute resolution timelines.

Registration and Tax Compliance:

• Mandatory KRA Pin for Digital Economy: The requirement for a KRA PIN has been expanded to include all persons (resident or non-resident) earning income from Kenya’s digital marketplace.

• Electronic Tax Invoice (e-TIMS): The Act solidifies the requirement for all businesses to issue invoices through the electronic tax invoice management system. A major update from the Finance Act 2025 is that any expenditure not supported by an e-TIMS invoice is now non-deductible for income tax purposes, with very limited exceptions.

Tax Payments and Refunds:

• Payment of Tax Under Dispute: Where a taxpayer appeals a decision to the High Court or Court of Appeal, they are now required to deposit 15% of the disputed tax in a suspense account at the KRA or provide a bank guarantee of the same amount before the appeal can be heard.

• Refund Timelines: The Commissioner is now required to process and pay verified tax refund applications within six months. If the refund is not paid within this period, it will begin to accrue interest in favor of the taxpayer.

• Offsetting Tax: Taxpayers can now apply to offset overpaid tax against any other tax head (e.g., using a VAT refund to pay a PAYE liability) more seamlessly through the iTax/e-TIMS integration.

Assessments and Audits:

• Statute of Limitations: The period for the Commissioner to amend a tax assessment is maintained at five years, but this limit is waived in cases of fraud, willful neglect, or tax evasion.

• Data Integration: The KRA is now legally empowered to integrate its systems with third-party data providers, including banks, telecommunication companies, and utility providers, to perform real-time "wealth audits" and identify non-compliant taxpayers.

Dispute Resolution:

• Alternative Dispute Resolution (ADR): The Act encourages the use of ADR to settle tax disputes outside the court system. The timeline for concluding ADR processes has been extended from 90 days to 120 days to allow for more complex settlements.

• Tax Appeals Tribunal (TAT): Decisions from the TAT must now be rendered within 60 days of the conclusion of a hearing to ensure speedier justice for taxpayers.

Penalties and Interest:

• Non-Compliance with e-TIMS: A new penalty has been introduced for failing to issue an electronic tax invoice, amounting to double the tax due or KES 2 million, whichever is higher.

• Amnesty Programs: While the Finance Act 2025 officially concluded the previous tax amnesty on interest and penalties, the Commissioner retains the power to recommend further relief for specific sectors under extreme economic hardship, subject to National Treasury approval.

Agency Notices and Enforcement:

• Securing Tax: The Commissioner’s power to issue agency notices (directing banks or tenants to pay KRA instead of the taxpayer) has been strengthened. Banks are now required to respond to such notices within 72 hours.

• Distress for Rent/Property: The Act clarifies the procedure for the KRA to seize and sell property to recover unpaid taxes, including the requirement to provide the taxpayer with at least 14 days' notice before the sale of seized goods.