By Jeff Kiraguri - Senior Associate, Tax
The Kenya Revenue Authority’s (KRA) public notice of November 10, 2025, marks a watershed moment in our tax history but perhaps for the wrong reasons. By mandating that all declared incomes and expenses be supported exclusively by electronic tax invoices (e-TIMS) under Section 23A of the Tax Procedures Act (TPA), the Commissioner has effectively signaled the beginning of the end for the traditional self-assessment regime in Kenya.
Kenya operates a self-assessment regime, where an individual or a business voluntarily declares the income received during the year and settles the resultant tax liability, if it exists. Where one did not accrue any income, then the law allows the taxpayer to file a nil return.
The self-assessment regime is anchored in law as per the provisions of Section 28 of the Tax Procedures Act(TPA).
28.(1) A taxpayer who has submitted a self -assessment return in the prescribed form for a reporting period shall be treated as having made an assessment of the amount of tax payable (including a nil amount) for the reporting period to which the return relates being the amount set out in the return.
We however note that as per the KRA public notice, once taxpayers upload their tax returns, KRA will validate the taxpayers returns confirming the expenses and income earned align to what is in KRA’s system.
Where there is a conflict, KRA may reject the taxpayers return and request that they adjust the return to align to its figures.
The problem
The realigning of a taxpayers own return to reflect that of KRA’s figures takes the position that KRA assessments are presumed correct and that if the taxpayer is of a contrary position then they will be required to disapprove KRA’s assessment.
This is a reversal and a significant shift in tax policy as it shifts the pendulum of tax responsibility to disapproving a return from KRA and not a taxpayer’s own self assessed return. Contrary to the position stated Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act highlighted below;
56.(1) In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.
Section 30 of the TAT Act which states as follows:
“―In a proceeding before the Tribunal, the appellant has the burden of proving—
(a) where an appeal relates to an assessment, that the assessment is excessive; or
(b)in any other case, that the tax decision should not have been made or should have been made differently.”
Further, the action of a taxpayer disapproving a decision of the Commissioner means that a taxpayer loses their presumption of innocence contrary to the provisions of Article 50(2) of the Constitution of Kenya and highlighted below;
(2) Every accused person has the right to a fair trial, which includes the right--
(a) to be presumed innocent until the contrary is proved;
The actions of a taxpayers return being set aside due to an algorthim opens a can of worms as the Income Tax Act is quite clear and candid in Section 54 that in preparing a return taxpayers are guided by their own accounts prepared by a 3rd party in its professional capacity as highligted below;It begs the question as to whether KRA is now an auditor of businesses
54. Documents to be included in return of income
(1)Where any person who carries on any business makes a return of income for any year of income, and accounts of his business for any accounting period relating to such year of income have been prepared or examined by another person in a professional capacity, then he shall furnish with such return of income–
We note that such significant tax changes should be supported by legislation from the National Assembly and require relevant stakeholder contribution as the future of tax law and administration will move from self assessment and actual accounting work to a future guided or based on algorithms with no regard to human interactions.
While digital transformation is inevitable, it must not come at the cost of constitutional rights and established legal principles. KRA must remember that tax administration is a matter of law, not just data entry.