Revenue Targets Rise as Parliament Rejects Expanded KRA Powers

Parliament has rejected several proposals that would have expanded KRA powers under Finance Bill 2026, preserving key taxpayer protections even as the government pushes for higher revenue collection. The decision comes at a time when the Kenya Revenue Authority faces widening revenue shortfalls and growing pressure to improve compliance without triggering fresh political resistance to taxation.

The recommendations by the National Assembly’s Finance and National Planning Committee represent the latest attempt by lawmakers to place limits on the authority of the KRA Commissioner General, particularly in areas touching on enforcement actions, taxpayer appeals and access to financial accounts.

Parliament Rejects New Enforcement Powers

Among the most significant proposals rejected by lawmakers was a plan to remove protections that currently prevent KRA from attaching a taxpayer’s bank accounts while an appeal is pending.

The proposed amendment would have allowed enforcement actions to continue even when a taxpayer had formally challenged an assessment through the appeals process.

Lawmakers concluded that the measure risked causing substantial disruption to businesses and individuals who could ultimately succeed in overturning disputed assessments.

The committee also rejected attempts to require taxpayers to obtain mandatory stay orders before securing protection against enforcement actions. Business groups and legal stakeholders argued that such a requirement would increase compliance costs and make it harder for taxpayers to access justice.

A separate proposal to include weekends and public holidays when calculating statutory timelines for objections and appeals was similarly dismissed. MPs argued that the change would effectively shorten the period available to challenge tax decisions and increase the likelihood of procedural default.

Why Lawmakers Opposed the Proposals

The committee’s objections centered on concerns about due process, access to justice and fair administrative action.

Members noted that freezing accounts during active disputes could create severe cash flow constraints, particularly for businesses dependent on uninterrupted banking operations.

They also raised concerns about situations where taxpayers might ultimately prevail in court or before a tribunal, only after having already suffered operational disruptions or financial losses resulting from enforcement action.

These concerns echoed submissions from stakeholders including the Law Society of Kenya, which warned that some of the proposed changes could weaken legal protections available to taxpayers.

The decision continues a pattern that has emerged over recent Finance Bills, where Parliament has repeatedly resisted attempts to expand KRA’s enforcement authority beyond existing safeguards.

New Transparency Rules for Tax Assessments

While lawmakers blocked several enforcement measures, they simultaneously backed amendments intended to improve transparency.

A proposed new clause would require the Commissioner General to disclose the information sources and calculations used when issuing tax assessments.

The amendment becomes particularly significant as KRA increasingly relies on third-party information, digital records, employer filings, electronic tax systems and audit data when determining tax liabilities.

Under the proposal, the burden would also fall on the Commissioner General to demonstrate the reliability and accuracy of information used in assessments.

Taxpayers would gain greater visibility into how liabilities were calculated and would be better positioned to challenge assessments they believe are inaccurate.

Revenue Targets Are Driving the Push for Stronger Enforcement

The debate cannot be separated from the broader fiscal pressures facing government.

KRA has been tasked with raising nearly Sh3 trillion in ordinary revenue in the fiscal year beginning July 1. The target follows a period in which collections have struggled to keep pace with Treasury projections.

Revenue gaps have increased pressure on policymakers to find alternative ways of improving collection performance without introducing politically difficult tax increases.

Within that environment, stronger enforcement tools have emerged as one of the government’s preferred approaches to boosting compliance and reducing leakages.

The repeated attempts to amend the Tax Procedures Act reflect that broader strategy.

Adan Mohamed Inherits a Difficult Balancing Act

The committee’s recommendations arrive only weeks after Adan Mohamed took office as KRA Commissioner General.

Mohamed assumed leadership of the tax authority amid mounting pressure to improve collections while supporting a business environment already facing economic headwinds.

His appointment followed a recruitment process that attracted dozens of applicants and came as Treasury sought stronger performance from the country’s primary revenue collection agency.

The parliamentary decision means Mohamed will pursue ambitious revenue targets without several of the enforcement powers that Treasury had hoped to secure through Finance Bill 2026.

That leaves KRA facing a difficult balancing act between expanding compliance and maintaining public confidence in the fairness of tax administration.

What Parliament Still Approved

Despite rejecting several proposals, lawmakers did approve measures that strengthen KRA’s role in collecting money owed to government entities.

The authority will be allowed to use tax recovery mechanisms to collect certain fees, levies and charges in much the same way it recovers unpaid taxes.

Parliament also retained a proposal to reintroduce a tax amnesty covering liabilities accrued up to December 31, 2025.

However, committee members warned that repeated amnesties risk creating expectations of future relief, potentially weakening voluntary compliance among taxpayers.

The Bigger Question Facing KRA

The Finance Bill debate highlights an increasingly important policy tension.

Government requires stronger domestic revenue collection to support spending commitments and manage fiscal pressures. At the same time, Parliament has signaled that it is unwilling to grant KRA unrestricted authority in pursuit of those goals.

The result is a compromise that preserves taxpayer protections while demanding better performance from the tax authority.

For KRA, the challenge now shifts from securing new enforcement powers to demonstrating that existing tools, improved compliance systems and better use of data can deliver the revenue growth the government expects.

That challenge will define the early months of Adan Mohamed’s tenure and shape the next phase of Kenya’s debate over taxation, compliance and taxpayer rights.

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