Clients seeking services at KRA headquarters, Times Tower, Nairobi.
A push by the National Treasury for taxpayers to secure mandatory stay orders to protect their accounts from being frozen by the Kenya Revenue Authority (KRA) has triggered a backlash from tax analysts and private sector players.
“To improve efficiency in tax administration, Finance Bill 2026 is proposing to allow tax assessments to be issued based on information lawfully available to the Commissioner. To further align enforcement of tax compliance, the Bill is proposing to amend the Tax Procedures Act to clarify that enforcement of tax collection when a judgment is in favour of the Commissioner shall only be suspended where a stay order has been granted,” Treasury Cabinet Secretary John Mbadi said in his 2026/27 budget speech on Thursday.
Cabinet Secretary for the National Treasury and Economic Planning John Mbadi displays his briefcase before reading the 2026/27 budget at Parliament Buildings, Nairobi, on Thursday, June 11, 2026.
The proposal made by the National Treasury on Thursday is a slight tweak from what is contained in Finance Bill 2026, where the State had proposed deletion of Section 42 (14(e)) of the Tax Procedures Act, which currently provides that KRA cannot attach accounts in instances where a taxpayer has filed an appeal disputing the authority’s assessment.
Business sector players have, however, pushed back, arguing that the proposal risks overreach by KRA, will still be injurious to business cashflows and will derail Kenya’s credentials as far as tax justice is concerned.
“In practice, what you will find most of the time is that people go and get the stay orders when they have finished the tribunal phase and are proceeding to the High Court, and this has been working very well. What this proposal implies is that payment will be upfront, and it will cripple all businesses if we are not careful. Sometimes the assessments can be as high as the turnover that the business had over the last five years,” Equity Group Head of Tax Lydia Ndirangu says.
Tax pundits are now warning that this proposal, if adopted and passed into law, is likely to see KRA engage in regulatory overreach in its push for ambitious and increasing revenue targets amidst a narrow tax base.
In the financial year starting July 1, 2026, the government targets collecting Sh3.63 trillion in total revenue, of which Sh2.98 trillion is attributable to ordinary revenue whose main sources are income tax and value added tax.
“If we were in an environment where there was goodwill from the Revenue Authority, a measure such as this one would be tolerable. However, the Revenue Authority can get desperate, especially when revenue collection is below target. If you look at this proposal, the burden is heavily weighted against taxpayers, and they deserve protection,” the East Africa Tax Leader at Deloitte, Fred Omondi, says.
“The proposal that empowers KRA to assess taxpayers and then collect despite one having disputed the assessment is problematic for the business environment. The proposal undermines the dictates of fair tax administration and risks weakening taxpayers’ confidence in the justice system.
Agency notices issued during appeals will disrupt business cashflows,” ICPAK Public Finance Committee Chairperson Robert Waruiru says.
This is the fourth time in the recent past that the State is attempting to roll back the Tax Procedures Act’s protection of taxpayers as far as agency notices are concerned.
Finance Bill 2022 and Finance Bill 2024 unsuccessfully proposed to introduce a mandatory deposit of 50.0 per cent and 20.0 per cent, respectively, of the disputed amount by the taxpayer before being able to secure an appeal.
Finance Bill 2025 proposed to amend the Tax Procedures Act to allow the Revenue Authority to issue agency notices and attach taxpayers’ accounts despite an appeal having been secured.
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