KRA proposes using government supplier payments to recover outstanding taxes.
KRA proposes recovering unpaid taxes when the government settles suppliers’ pending bills, alongside data checks and tax refund offsets.
A proposed KRA tax recovery strategy would use payments to government suppliers to collect their outstanding taxes. The Kenya Revenue Authority outlined the measure in a submission to the National Assembly’s Finance and National Planning Committee.
The Treasury puts government debt owed to businesses at about Ksh175 billion. Meanwhile, business owners have protested payment delays, with some waiting years for their money.
The proposal comes amid pressure on KRA to increase revenue for the national budget. It targets large and medium taxpayers with unpaid tax obligations.
How the KRA tax recovery proposal would work
Under the proposal, KRA would identify suppliers who owe taxes while awaiting payment from government agencies. It would then use the settlement process to recover those tax debts.
Alongside this measure, the authority is deploying technical teams to compare third-party data with its tax records. These checks include information from the Integrated Financial Management Information System, known as IFMIS.
KRA says the teams will address discrepancies identified during those comparisons and turn them into additional revenue. It is also reconciling withholding taxes on payments for goods supplied to government entities and corporate buyers.
In addition, the authority says it is implementing a system that offsets approved tax refunds against outstanding liabilities. These measures form part of its effort to collect unpaid taxes from individuals and businesses.
Revenue shortfall and KRA’s own pending bills
Figures presented to the committee show KRA collected Ksh2.844 trillion in the financial year ending June 30. Its target stood at Ksh2.977 trillion, while the submission put the revenue shortfall at Ksh132.1 billion.
However, KRA’s submission also lists its own unpaid obligations. The authority reported pending bills totalling Ksh5.58 billion as of June 30, 2026.
The largest portion relates to Excise Goods Management System stamps, with outstanding payments of Ksh4.34 billion. A further Ksh829.59 million relates to a court settlement involving Habimana Sued.
KRA also listed Ksh416.36 million owed to the Administration Police Service for security services. These obligations sit alongside its efforts to recover outstanding taxes through government payments and approved refunds.
