KRA Company Returns: A Guide for Directors and Business Owners
Running a company in Kenya comes with more than just selling products, paying employees and keeping customers happy. There are also tax obligations to stay on top of.
One of these is filing the company’s annual income tax return with the Kenya Revenue Authority (KRA).
And here’s something directors and business owners sometimes overlook: having a company that isn’t currently making money doesn’t necessarily mean you can ignore KRA returns.
Whether your company is active, making losses, dormant or simply hasn’t started trading yet, understanding your company’s tax filing obligations can save you from unnecessary penalties and compliance problems.
So, let’s look at what company returns are, who needs to file them and what directors should know.
What are KRA company returns?
A KRA company return is an annual declaration of a company’s income, expenses, tax position and other relevant financial information for a particular accounting period.
For companies, the corporation income tax return is filed online through iTax using the Income Tax Company Return (IT2C). KRA states that the return should generally be filed within six months after the end of the company’s accounting period.
It’s important to understand that this is the company’s tax return, not the director’s personal income tax return.
The company and its directors are separate in the eyes of the law, and each may have their own tax obligations.
Who is responsible for filing company returns?
The responsibility ultimately rests with the company, but directors and business owners shouldn’t assume that their accountant will automatically take care of everything.
As a director, you have a responsibility to make sure the company’s statutory and tax obligations are being handled properly.
If you’ve hired an accountant or tax consultant, that’s helpful. But it’s still worth checking that returns are actually being filed and that the information submitted to KRA is accurate.
A simple question such as, “Have our company returns been filed?” can save you a lot of trouble later.
When should a company file its KRA return?
Company tax returns Kenya
Companies and other non-individual taxpayers generally file their income tax returns by the last day of the sixth month after the end of their accounting period.
For a company whose accounting period ends on 31 December, this means the annual company return is due by 30 June of the following year.
But not every company necessarily follows a January-to-December accounting period.
So don’t automatically assume that your company’s deadline is 30 June. Check your company’s accounting period.
A simple example
Suppose ABC Limited’s accounting year runs from 1 April 2025 to 31 March 2026.
Its company income tax return would generally be due by the last day of the sixth month after the accounting period ends.
That would be 30 September 2026.
The important thing is to work from your company’s actual accounting period.
What information is needed to file company returns?
The exact information required depends on the company’s circumstances, but proper financial records are essential.
Your accountant may need information relating to:
- Business income and sales
- Allowable business expenses
- Purchases
- Assets
- Liabilities
- Payroll and employment costs
- Withholding tax
- Instalment tax
- Other relevant tax credits
- Profit or loss for the accounting period
The purpose isn’t simply to enter numbers into an online form.
The figures declared should be supported by the company’s accounting records.
KRA explains that, when determining taxable income, companies declare gross income and deduct expenses that were wholly and exclusively incurred in producing that income, subject to the applicable tax rules.
What if the company made a loss?
Making a loss doesn’t automatically mean you can skip the annual company return.
Your company still needs to meet its applicable filing obligations.
In fact, reporting the company’s actual financial position can be important because KRA allows companies to carry forward qualifying losses for offset against future taxable income, subject to the applicable rules.
So if your business had a difficult year, don’t simply assume that there’s nothing to file.
Your accountant should properly determine the company’s tax position and submit the appropriate return.
What if the company didn’t do any business?
This is another area where directors sometimes get confused.
A company may be registered but not actively trading. Perhaps the business hasn’t started, operations were paused, or the company has been dormant for some time.
That doesn’t mean directors should simply ignore the company’s KRA obligations.
Whether a nil return or another type of filing is appropriate depends on the company’s tax obligations and circumstances.
If the company has been inactive for a long period, it’s also worth reviewing whether it still needs to remain registered and what other statutory obligations may apply.
Don’t wait until you need a Tax Compliance Certificate to discover that several years of compliance issues have accumulated.
What happens if you file company returns late?
Late filing can result in penalties and may affect the company’s tax compliance status.
KRA specifically states that corporation tax returns filed after the required six-month period attract a penalty.
And this is where a small delay can become an expensive problem.
If a company has several outstanding returns, the directors may eventually need to deal with accumulated penalties, outstanding tax obligations and other compliance issues.
It’s usually much easier to keep up with the annual filings than to try to clean up years of missed returns later.
Company returns and eTIMS
Company tax returns Kenya
There is another reason directors should take company records seriously: eTIMS.
Electronic invoicing is increasingly connected to how KRA validates business income and expenses.
KRA’s current guidance states that from the 2026 year of income, declared income and expenses in income tax returns must be supported by valid electronic tax invoices generated and transmitted through eTIMS/TIMS, subject to the applicable rules.
KRA has also published guidance showing that its systems can compare turnover declared in a company income tax return against turnover supported by eTIMS/TIMS invoices.
That makes proper bookkeeping even more important.
Your sales records, invoices, bank records, accounting books and tax return shouldn’t tell completely different stories.
Don’t confuse company returns with other KRA returns
A company may have several tax obligations depending on what it does.
For example, a company could have obligations relating to:
- Corporation income tax
- VAT
- PAYE
- Withholding tax
- Instalment tax
- Other applicable taxes
The annual company income tax return doesn’t replace these other obligations.
For instance, VAT returns have their own filing requirements, while PAYE and withholding tax also have separate deadlines.
So when reviewing your company’s tax compliance, don’t ask only:
“Did we file the company return?”
A better question is:
“Are all our applicable KRA tax obligations up to date?”
Why company returns matter when applying for a Tax Compliance Certificate
A Tax Compliance Certificate (TCC) is often needed when a business is dealing with certain government processes, tenders and other transactions.
KRA states that taxpayers applying for a TCC need to be compliant with applicable tax return filing and payment obligations, and its enhanced TCC process also includes eTIMS/TIMS compliance for non-individual entities and individuals with business income.
So if your company has outstanding returns, unpaid tax or other compliance issues, getting a TCC may become more difficult.
That’s why compliance shouldn’t only become a priority when a tender deadline is approaching.
What directors should do before filing
Before your company’s return is submitted, take some time to review the company’s records.
Ask yourself:
Are all our sales recorded?
If your business issued invoices throughout the year, make sure the accounting records properly capture the transactions.
Are our expenses properly supported?
Don’t assume every expense automatically qualifies as a tax deduction. The expense needs to meet the applicable requirements.
Are our KRA payments accounted for?
Check instalment tax, withholding tax and other relevant tax credits.
Do the numbers make sense?
Your financial statements, bookkeeping records, invoices and tax return should be properly reconciled.
Are previous returns up to date?
If you’ve recently taken over as a director, don’t assume that everything was done correctly before you arrived. Check the company’s compliance history.
What if you discover an old missed return?
Don’t ignore it.
If you discover that your company has outstanding returns, start by checking the company’s iTax account and determining exactly which returns are missing.
You may need to file outstanding returns, address penalties or deal with unpaid tax.
If the situation is complicated, getting assistance from a qualified tax professional can help you understand what needs to be corrected before taking action.
A simple company tax compliance routine
You don’t need to wait until the filing deadline to think about KRA compliance.
A better approach is to make tax compliance part of your normal business routine.
Keep your accounting records updated throughout the year. Reconcile your sales and expenses regularly. Keep your eTIMS records organised. Track tax payments and deadlines.
Then, when the annual company return is due, you’re not starting from scratch.
You’re simply reviewing information that has already been maintained throughout the year.
Final thoughts
KRA company returns aren’t just another form for your accountant to submit.
They’re an important part of maintaining your company’s tax compliance.
For directors and business owners, the most practical approach is simple: know your company’s filing obligations, keep proper records and don’t wait until the deadline to discover that something is missing.
And if your company has been dormant, inactive or operating at a loss, don’t assume that means there are no tax obligations.
A quick review of your KRA status can help you understand where the company stands and what needs to be done next.
Need help with company returns, KRA compliance or tax records? Bzinex can help you to review your tax obligations, organise your records and handle KRA-related compliance matters. You can call us or Whatsapp +254 797 532 345 now.
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