Kenya Revenue Authority (KRA) has informed employers, employees, and the general public that the Finance Act, 2025 amended the Income Tax Act, Cap 470 (“the Act”) to mandate employers to apply all relevant tax deductions, reliefs, and exemptions when computing income tax on employee emoluments.

In a notice dated October 2, KRA provided guidance to employers in line with the amendment.

KRA has directed employers to apply personal relief to all resident employees as stipulated under the Act.

Allow insurance relief, mortgage interest deductions, and contributions to registered pension schemes and Post-Retirement Medical Funds – provided these are declared by the employee and supported by the necessary documentation and fall within the statutory limits.

The Authority has told employers to deduct statutory levies and contributions paid by employees, such as the Affordable Housing Levy and contributions to the Social Health Insurance Fund, in accordance with the Act.

Further, KRA has directed employers to recognize and apply tax exemptions for employees who hold valid tax exemption certificates, subject to the prescribed limits.

Employers have also been told to ensure accurate and timely submission of PAYE returns, reflecting all applicable reliefs, deductions, and exemptions.

Employees are advised to promptly provide their employers with all required documentation to support claims for deductions and reliefs, where applicable.

For any clarification or further guidance, employers and employees visit your nearest Tax Service Office (TSO) or reach us through Tel:254(020)4999999, +254(0711)099999/Email: .

On September 19, KRA posted Draft Income Tax (Significant Economic Presence Tax) Regulations, 2025.

KRA said the Commissioner General on behalf of the Cabinet Secretary, National Treasury and Economic Planning, developed the draft Income Tax (Significant Economic Presence Tax) Regulations, 2025 in compliance with the Statutory Instruments Act, Cap. 2A.

The Authority invited interested members of the public, professionals and stakeholders to submit their inputs and comments for consideration in the finalisation of the Regulations.

“The draft Regulations have been posted on the KRA website. You may download the draft Regulations for your reference. KRA asked members of the public to channel their submissions to the Commissioner General, Kenya Revenue Authority, P.O Box 48240-00100, Nairobi or by email to stakeholder.engagement@kra. go.ke to be received on or before October 7, 2025,” KRA said.

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