KRA May Subtract Unpaid Taxes From the Government’s Ksh175 billion due to companies.

The Kenya Revenue Authority (KRA) is looking at a plan that would let government agencies take money owed to companies to cover their unpaid taxes. 

The tax agency highlighted in a submission to the National Assembly’s Finance and National Planning Committee its suggested plan to recover past-due taxes via government pending bills. 

The plan comes as the government is under fire over about KSh175 billion in past-due payments owed to private contractors and providers. Reportedly some companies have waited years to get compensated for goods and services supplied to public entities. 

KRA would find companies with past tax obligations and check their records against government payment data under the suggested system. The agency would try to collect unpaid taxes where possible as the government resolves checked outstanding invoices. 

Technical teams are also being sent out by KRA to look for inconsistencies by cross-referencing information from its own tax records with that from the Integrated Financial Management Information System (IFMIS). 

The move comes after a difficult fiscal year 2025–2026 during which KRA gathered KSh2.844 trillion against a goal of KSh2.977 trillion, resulting in a deficit of KSh132.1 billion. 

Additionally seeking other actions, the government is trying to match withheld taxes and apply accepted tax refunds against unpaid bills. 

For companies serving government entities, the plan might influence their ultimate payment level once outstanding bills are resolved. 

But the plan is still being developed and shouldn’t be confused for a currently applied tax break. Businesses will have to get more direction on how any planned offsetting scheme would run. 

The rise shows how much government organizations are under to increase income collecting and handle delayed payments to suppliers.

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