TAX PROCEDURES ACT GUIDE
This guide summarizes key administrative penalties, interest, and criminal sanctions under the Tax Procedures Act (TPA), 2015 as amended.
- It covers late filing, late payment, record-keeping failures, registration defaults, tax shortfalls, fraud, CRS obligations, and criminal offences.
- The table provides quick reference rates, caps, and statutory provisions for compliance planning and advisory purposes.
- Designed for businesses, tax agents, finance officers, and directors seeking clarity on statutory exposure and risk management.
- Late Filing & Submission Penalties
| Category | Applicable Tax / Obligation | Penalty | Legal Reference | Notes |
| Late Filing of Returns | PAYE | 25% of tax due or KES 10,000 (higher) | Sec 83 TPA | Highest rate due to trust nature of PAYE |
| Company/Partnership Income Tax | 5% of tax due or KES 20,000 (higher) | Sec 83 TPA | ||
| VAT | 5% of tax due or KES 10,000 (higher) | Sec 83 TPA | ||
| Excise Duty | 5% of tax due or KES 10,000 (higher) | Sec 83 TPA | ||
| Monthly Rental Income (Individual) | 5% of tax due or KES 2,000 (higher) | Sec 83 TPA | ||
| Monthly Rental Income (Non-individual) | 5% of tax due or KES 20,000 (higher) | Sec 83 TPA | ||
| Turnover Tax (TOT) | KES 1,000 | Sec 83 TPA | Fixed penalty | |
| Other Documents (statements, notices) | Any required document | KES 1,000 per day (Max KES 50,000) | Sec 83 TPA | Daily accrual |
| Failure to Submit CRS Return | Reporting Financial Institution
Third-Party Information Return (Common Reporting Standard) |
KES 1,000,000 per failure | Sec 6B & 88A | Includes “nil” return |
- Late Payment & Withholding Penalties
| Category | Penalty | Legal Reference | Notes |
| Late Payment of Tax | 5% of unpaid tax | Sec 83A | Applies to all major taxes |
| Late Payment Interest | 1% per month (simple interest) | Sec 38 | Interest capped at principal tax |
| Failure to Deduct/Withhold Tax | Tax becomes debt + 5% penalty + 1% monthly interest | Sec 39A | Applies to WHT & PAYE failures |
- Record-Keeping & Registration Penalties
| Category | Penalty | Legal Reference | Notes |
| Failure to Keep Records | Higher of 10% of tax payable OR KES 100,000 | Sec 82 | Applies per reporting period |
| Failure to Register/Deregister | KES 100,000 per month (Max KES 1,000,000) | Sec 81 | Monthly accumulation |
- Serious Compliance Failures & Fraud
| Offence | Penalty | Legal Reference | Notes |
| Tax Shortfall – Deliberate Act | 75% of shortfall | Sec 84 | +10pp (2nd offence), +25pp (3rd+) |
| Voluntary Disclosure | -10pp reduction | Sec 84 | If before KRA discovery |
| Tax Avoidance | 200% of avoided tax | Sec 85 | Civil penalty |
| Fraudulent Refund Claim | 200% of claim | Sec 88 | |
| Failure to Use Electronic Tax System | 200% of tax due | Sec 86 | If Commissioner rejects reason |
| Failure to Integrate (Turnover > KES 5M) | KES 100,000 per month upon conviction | Sec 59A(5) | Court-based penalty |
| False CRS Statement | KES 100,000 per false statement and/or 3 yrs imprisonment | Sec 88A | |
| General CRS Non-compliance | KES 20,000 + KES 20,000 per day (Max 60 days) | Sec 88A |
- Miscellaneous Administrative Penalties
| Offence | Penalty | Legal Reference |
| Failure to Appear Before Commissioner (Individual) | KES 10,000 | Sec 87 |
| Failure to Appear (Company/Other Person) | KES 100,000 | Sec 87 |
- Criminal Fines & Sanctions (Upon Conviction)
| Offence | Fine | Imprisonment | Legal Reference |
| General Offences | Up to KES 1,000,000 | Up to 3 years | Sec 104(1) |
| Recovery/Officer Offences | Up to KES 2,000,000 | Up to 5 years | Sec 98, 102, 104(2) |
| Tax Fraud | Up to KES 10,000,000 or double tax evaded | Up to 10 years | Sec 97 & 104(3) |
| Offences by Tax Agents | Double tax evaded or up to KES 5,000,000 | Up to 5 years | Sec 92 & 104(4) |
| PIN-related Offences | Up to KES 1,000,000 | Up to 3 years | Sec 91 & 104(1) |
Important Legal Notes
| Provision | Effect | Legal Reference |
| Waiver for KRA System Errors | CS may waive penalties/interest caused by proven iTax errors | Sec 89(5A) |
| No Double Jeopardy | Cannot suffer both administrative penalty and criminal prosecution for same act | Sec 80 |
| Official Demand Required | Administrative penalty payable only after written demand | Sec 89(3) |
Disclaimer
The information in this publication is provided by Arichum Consulting for general informational and educational purposes only and reflects the Tax Procedures Act and related legislation as at 27 January 2026. While reasonable care has been taken to ensure accuracy, it may not reflect subsequent amendments, judicial decisions, or regulatory changes. Users are encouraged to verify the current legal position through official sources or obtain independent professional advice.