The Kenya Revenue Authority has clarified how businesses should handle annual tax filings, even when they have not made any profits.
In a statement shared on X, formerly Twitter, the tax authority said businesses that recorded zero profit are still required to submit tax returns.
According to Kenya Revenue Authority, companies must declare any income earned and expenses incurred during the year, even if the business did not generate profits.
“Please note you have to declare any income and expenses incurred for the year even if there was no profit,” KRA stated.
The clarification followed concerns raised by a business owner who said his two companies were still new and had not made any profit, asking how they should file returns now that nil returns are no longer applicable.
“My two companies are still very young. I have made zero profit yet you said that we’re not going to file NIL returns. What do I do?” the user asked.
The guidance means all registered businesses, including startups and firms operating at a loss, must file annual returns regardless of whether they made profits.
KRA said the move is aimed at promoting accurate record-keeping and ensuring compliance within the tax system, especially for young businesses still trying to establish themselves.
Many small enterprises often assume that making losses allows them to file nil returns to avoid penalties.
However, the authority noted that businesses must still disclose their financial activity, including operational expenses, instead of declaring zero activity.
KRA also reminded taxpayers that while losses may be carried forward in some cases, active businesses can still be subject to minimum tax obligations based on turnover where applicable.
The clarification comes as businesses and individual taxpayers rush to meet the June 30 tax return filing deadline.
Failure to submit returns on time attracts penalties of KSh2,000 for individuals and up to KSh20,000 for companies.
Separately, Kenya Revenue Authority also advised salaried Kenyans that they can still file annual returns even without a P9 form, which is normally issued by employers.
Taxpayers without the document can use the “ITR for Employment Income Only” option available on the iTax portal, according to the authority.