Employers urged to adopt new PAYE system to avoid penalties
Under the theme “KRA Simplifies the PAYE Return Filing Process,” KRA said the Excel-based return template will replace the current method
The Kenya Revenue Authority (KRA) has introduced a simplified method for employers to file Pay As You Earn (PAYE) returns with the system expected to take effect on July 1.
KRA said the new system is designed to make the process easier for employers in both the private and public sector.
According to the taxman, the system also aligns with its broader digital transformation agenda.
“Kenya Revenue Authority (KRA) has simplified the PAYE return filing and payment process to align with the simplified return from taxpayers to improve the user experience for all, including the public, non-profit, and private sectors,” it announced.
Under the theme “KRA Simplifies the PAYE Return Filing Process,” KRA said the Excel-based return template will replace the current method in a move aimed at supporting ongoing reforms in tax administration and make it easier for employers to meet their tax obligations.
Further, the new process is designed to connect with key government systems through API links, including the Integrated Management Information System (iMIS) and the Central Bank of Kenya.
The integration will allow for automatic deduction and remittance of statutory contributions such as the Affordable Housing Levy, National Industrial Training Authority (NITA) Levy, and other deductions tied to PAYE.
All employers have been directed to adopt the new format beginning next month and align their payroll systems with the new format before the deadline to avoid penalties for non-compliance.
To help businesses adjust, the simplified Excel return form and a sample Comma-Separated Values (CSV) file have been uploaded on the KRA website under the publications section: www.kra.go.ke.
Reforms at the Tax Collecting Authority dates back to 2020 when KRA has been effecting changes such as the Electronic Tax Invoice Management System (eTIMS), which helped reduce VAT fraud by 15 per cent in 2023.
The simplified PAYE return is part of the wider 2022 National Tax Policy goals to close the country’s tax revenue gap, estimated at 6 per cent of GDP.
It also complements other innovations such as GAVA Connect, a government platform launched in 2024 to support digital access to public services.
