The Kenya Revenue Authority (KRA) has announced major changes to how employers file their Pay As You Earn (PAYE) tax returns. The changes, effective from July 1, 2025, aim to simplify the process and make tax filing more efficient for both public and private sector employers.
Why the Change?
In a public notice dated June 23, 2025, KRA stated that the new PAYE filing process was developed in response to feedback from taxpayers. Many employers had expressed concerns about the complexity and time-consuming nature of the previous system.
By simplifying the return process, KRA hopes to reduce errors, improve compliance, and enhance the overall user experience for employers. The new system applies to organizations in the public, private, and not-for-profit sectors.
Key Features of the New System
One of the biggest updates is the ability to file PAYE returns based on specific employee categories. This allows employers to better organize their submissions and avoid filing unnecessary or irrelevant data.
Another key feature is integration with major government systems through APIs. These include:
- The Integrated Financial Management Information System (IFMIS)
- The Central Bank of Kenya (CBK)
- Government human resource information systems
This integration means that once payroll details are filled in, they can be submitted and processed more easily, without needing to manually input data across different platforms.
What Employers Need to Do
Employers are required to download the Simplified Excel PAYE Return form from the KRA website. Alongside the form, sample CSV templates are also available to guide how payroll data should be correctly filled in.
Using these templates, employers must enter information such as:
- Employee remuneration
- PAYE amounts
- Affordable Housing Levy deductions
- NITA Levy contributions
- Other relevant statutory deductions
Once the Excel form is completed, it can be uploaded to the KRA’s iTax system for submission.
Streamlining Compliance
According to KRA, this simplified approach is expected to:
- Improve accuracy in filing
- Reduce processing time for returns
- Help organizations remain compliant with tax laws
In addition, the system will help KRA identify businesses that are not paying Value Added Tax (VAT), further supporting tax enforcement.