Navigating the tax landscape in Kenya can be intricate, but understanding the mechanisms of tax refunds can lead to significant financial benefits. In 2025, the Kenya Revenue Authority (KRA) continues to streamline the refund process, ensuring taxpayers can reclaim overpaid taxes efficiently.
What is a Tax Refund?
A tax refund is a reimbursement to a taxpayer for any excess amount paid to the government. This overpayment can occur due to various reasons, such as over-deduction of Pay As You Earn (PAYE), eligibility for tax reliefs, or errors in tax computations. The KRA facilitates these refunds to promote fairness and compliance within the tax system.
Types of Tax Refunds in Kenya
1. Income Tax Refunds
These arise when individuals or corporations overpay their income taxes. Common scenarios include:
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Over-deduction of PAYE by employers
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Eligibility for mortgage interest relief, insurance premium relief, or annual tax relief
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Tax exemptions due to disability
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Overpayment of installment taxes
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Withholding tax credits
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Advance tax credits
Note: Claims must be made within five years from the date the tax was paid.
Source: kra.go.ke
2. Value Added Tax (VAT) Refunds
VAT refunds occur when businesses overpay VAT, often due to:
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Excess credits from zero-rated supplies
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Excess credits arising from withholding VAT
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Bad debts where payment hasn't been received after accounting for and paying tax on a supply
3. Excise Duty Refunds
Applicable when excise duty has been paid on goods that:
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Are damaged or stolen before consumption
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Are returned by the buyer as per the sale contract
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Are used to manufacture unexcisable goods
How to Apply for a Tax Refund
The KRA has digitized the refund application process through the iTax platform:
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Log in to iTax using your KRA PIN and password
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Navigate to the 'Refund' tab and select the appropriate tax obligation
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Fill in the required details, including bank account information
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Specify the refund type, reason, and amount
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Upload supporting documents (e.g., P9 forms, insurance certificates)
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Submit the application
After submission, an acknowledgment number is generated, which can be used to track the status of the application.
Source: kra.go.ke
Processing Time and Important Considerations
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Processing Duration: Refunds are processed within 90 days if all supporting documents are in order
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Application Period: Claims must be made within five years from the date the tax was paid
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Audit Requirement: First-time claimants may undergo a pre-payment audit
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Debt Status: Ensure all tax debts are cleared or have valid debt status reports before applying
Source: kra.go.ke
Penalties for Fraudulent Claims
Submitting false or fraudulent refund claims is a serious offense. Penalties include:
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A fine equal to double the amount falsely claimed
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Repayment of the erroneously refunded amount with applicable interest
It's crucial to ensure all information and documents provided are accurate and truthful.
Source: kra.go.ke
Tax Amnesty 2024/2025
The KRA has introduced a tax amnesty program running from 27th December 2024 to 30th June 2025. This amnesty applies to:
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Interest, penalties, or fines on tax debts up to 31st December 2023
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Taxpayers who pay outstanding principal taxes for periods up to 31st December 2023 within the amnesty period
Note: The amnesty does not apply to principal taxes accrued after 31st December 2023.
Source: kra.go.ke
Need Help Navigating Tax Refunds or the Tax Amnesty Program?
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