KRA at your business door? Avoid these 5 mistakes and sleep peacefully

Here are the 5 mistakes that put your business at risk:

📋 1. Filing "nil" while your account is moving

You think filing "zero" has no consequences? Serious mistake. KRA cross-checks your returns with your bank statements, M-Pesa transactions, and eTIMS invoices . If you have money coming in but declare "zero", you're automatically flagged.

Concrete example: The 392,162 taxpayers identified by KRA all filed "nil" while having transactions . The minimum penalty is KES 2,000 for individuals and KES 20,000 for companies .

🧾 2. Real expenses, but without eTIMS invoices

You paid a supplier. You have the M-Pesa proof. But no eTIMS invoice. Since 2026, KRA automatically disallows any expense not backed by a valid electronic invoice . You pay twice: once for the goods, once for the taxes.

Concrete example: "No eTIMS, No Deduction" is the new rule . If your invoice isn't in eTIMS, the expense is added back to your taxable income. The penalty can reach KES 100,000 or 10% of the tax due .

💰 3. Discrepancies between your declarations and bank statements

KRA now has a complete view of your transactions via banks and M-Pesa . If your declarations don't match your statements, you're automatically audited.

Concrete example: An entrepreneur declaring KES 500,000 in income but whose bank account shows KES 2 million in inflows is a red flag . The discrepancy is automatically detected.

💼 4. Under-declaring PAYE or benefits-in-kind

Benefits-in-kind (car, housing, phone) are not "free" perks. KRA has precise rules. Under-declare, and you face backdated penalties .

Concrete example: Failure to deduct PAYE attracts a penalty of 25% of the amount due or KES 10,000, whichever is higher . And payroll errors are automatically cross-checked with NSSF and SHIF .

📅 5. Missing filing deadlines

30 June for income tax. The 20th of the month for VAT. The 9th of the month for PAYE. A delay, and penalties accumulate .

Concrete example: For companies, late filing costs KES 20,000 or 5% of the tax due . And 1% interest per month of delay .

Tip: Do a "tax health check" before each filing. Check your eTIMS invoices, bank statements, and past returns. One hour today could save you years of procedures.

Do it now: Log in to iTax. Check your past returns. If you filed "nil" while having transactions, correct it before KRA catches up.

Sources: KRA – eTIMS Compliance Report 2026 ; KRA – Offences & Penalties ; Business Daily – KRA Crackdown ; Nyangena Ogechi – KRA Audit Triggers 2026 ; Adamjee Auditors – Tax Audit Guide 2026 .

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