New Year Tax Planning Guide for Kenyan Businesses: January 2026 Edition

The 2025 income tax return window opened January 1 and closes June 30, 2026. If you're a business owner or self-employed, you're three months away from the rush. But income tax is just one piece. VAT returns are due by the 20th of each month, and if you have employees, PAYE remittance is due by the 9th of the following month for the prior month's payroll. Miss any of these, and KRA triggers automatic penalties and compounding interest — with no warnings, no grace periods, and no appeals for lateness itself.

January is the month to get three things right: file your nil return if you earned nothing in 2025, confirm your payroll deductions are correct, and make sure your VAT or PAYE remittances are tracked.

Why January Matters: It's the Compliance Reset Month

Filing for each year opens on January 1 - file early and skip the deadline-week traffic jams. The KRA portal (itax.kra.go.ke) is live, and early filers avoid the system slowdown that hits in June. Beyond that, January is when you fix payroll mistakes from 2025 and set up your 2026 deductions correctly.

If you have employees, you must remit all three levies to KRA by the 9th of each month — that's PAYE, NSSF and the Affordable Housing Levy. These are not optional, and the penalty for late PAYE payment is harsh: 25% of the PAYE owed — the highest penalty rate of any KRA obligation.

Get Your Payroll Right: 2026 Rates Have Changed

If you're calculating salaries, the numbers shifted in February 2026. The NSSF Upper Earnings Limit jumped from KES 72,000 to KES 108,000/month. Your employee now pays 6% NSSF up to that limit, and you match it. SHIF takes 2.75% of gross pay, with a minimum of KES 300 and no cap. The Affordable Housing Levy takes 1.5% of gross pay from the employee, matched by the employer.

The order matters. SHIF contributions and the Affordable Housing Levy are deducted from pay before PAYE is calculated, alongside NSSF. Get this wrong and your PAYE will be wrong, which triggers an audit and penalties later. On KES 100,000 regular monthly gross pay, a resident employee pays KES 6,000 NSSF, KES 2,750 SHIF, KES 1,500 Housing Levy and KES 19,308.35 PAYE.

If your payroll software hasn't been updated for 2026 rates, or if you're calculating by hand, a verified KRA tax expert on Kaziiko can audit your payroll and flag issues before KRA does.

The Quarterly Deadlines You'll Actually Face

The main deadlines are PAYE remittance by the 9th of the following month, VAT and turnover tax by the 20th of the following month, corporate instalment tax on the 20th of the 4th, 6th, 9th, and 12th months of the financial year, and the annual income tax return by 30 June. If you forget January, you have February 9 to catch up on January PAYE, and February 20 for January VAT.

But the real cliff is June. Taxpayers must file their 2025 Income Tax Returns by midnight on Tuesday, June 30, 2026, with no extension expected. There's no sitting back if you miss January. The KRA won't extend.

If You're Starting a Business Right Now

Business name search and registration are now combined into a single KSh 950 payment. You file through eCitizen, and the BRS confirms your registration in one day. If you're registering a private limited company, the official BRS registration fee for a private limited company is KES 10,650 as of July 2026, with a 3–5 day timeline.

After registration comes the KRA PIN. You need this before you can file taxes or hire an employee. There's no fee for the PIN itself, but the portal sometimes has queues. Do it early in January, not in June.

Frequently Asked Questions

Do I really have to file a nil return if I earned nothing?

If you earned no income but have a KRA PIN with Income Tax Obligation, you are still required to file a return for the year of income. File a nil return through iTax. Skipping it leaves you non-compliant.

What's the penalty if I file late?

Late filing attracts a penalty of Ksh2,000 or 5 per cent of the tax due, whichever is higher. Unpaid tax also accrues interest at 1 per cent per month. You can't appeal the lateness itself; KRA has no discretion here.

I use multiple suppliers and make withholding payments to KRA — when is that due?

Withholding tax must be remitted to KRA by the 20th of the following month. Track these separately from VAT — they're different deadlines and different return forms on iTax.

Can I get an extension if I'm not ready by June 30?

KRA has already given sufficient notice and will not repeat last year's decision to extend the deadline due to system pressure. File on time. If you're behind, find a verified Kenyan expert on Kaziiko now who can help you gather documents and file before the deadline hits.