The Kenya Revenue Authority (KRA) has directed that some businesses be removed from an internal tax compliance watchlist after admitting the system had been misused and ended up hurting genuine taxpayers.
In an internal memo dated Tuesday, March 10, the tax authority said the tool known as the “special table” in the iTax system was originally created to track VAT-registered businesses suspected of tax fraud or other compliance problems.
However, KRA acknowledged that the tool had gradually become the main way of enforcing compliance and, in the process, was sometimes used unfairly against legitimate businesses.
According to the memo, the system was meant to discourage tax evasion and deal with companies involved in tax-related crimes. But the authority now says it had been abused, leading to cases where honest businesses were penalised instead of being supported to meet their tax obligations.
“This has led to abuse of the tool and punishing of genuine business people and taxpayers instead of facilitating them to do business and subsequently pay their fair share of taxes,” the memo stated.
Following the directive, KRA said the practice of placing taxpayers on the special table has been stopped with immediate effect. The only exceptions will be cases involving missing trader schemes, tax fraud, or other tax-related crimes.
The authority also ordered that taxpayers who had been placed on the list for reasons other than fraud or missing trader schemes be removed unconditionally.
Relationship managers within the tax authority have been instructed to start notifying affected taxpayers about their removal from the watchlist and guide them on how to remain compliant going forward. The notifications are expected to be completed by Thursday, March 12.
KRA added that in future, businesses will only be placed on the special table after proper investigations confirm their involvement in suspicious tax schemes. Any such action will also require approval through the relevant management channels.
The special table is a compliance tool used by KRA to monitor taxpayers whose records show suspicious or inconsistent tax behaviour.
Businesses placed on the list face restrictions within the iTax system, including being unable to file returns or claim input tax. In many cases, their VAT-related transactions are also suspended until the matter is resolved.
READ ALSO: How to File KRA Nil Returns (2025/2026 Step-by-Step Guide)
