In a significant move aimed at improving service delivery and easing refund delays, the Kenya Revenue Authority (KRA) has announced an increase in the maximum tax refund allocation to businesses. Effective from December 2025, businesses can now access a maximum refund of Ksh 40 million per month, an increase from the previous Ksh 30 million. This enhancement is part of a series of reforms aimed at streamlining the refund process and improving taxpayer services.
Key Highlights of KRA’s Refund Reforms
The KRA’s Commissioner for Micro and Small Taxpayers, Mr. George Obell, shared the news during a statement on December 11, 2025. He confirmed that KRA had increased its refund funding from Ksh 2.5 billion to Ksh 2.96 billion per month, a move that will significantly reduce delays in processing tax refunds. This step marks a substantial improvement in refund operations, ensuring businesses have quicker access to funds that can be reinvested into their operations.
The increased refund allocation will benefit businesses by reducing long waiting periods for refunds, thus improving liquidity and financial stability, particularly for small and medium enterprises (SMEs) across Kenya. This reform comes as part of KRA’s ongoing efforts to ensure fairness and efficiency in tax administration.
Operational Enhancements and Collaboration with Private Sector
The KRA has been continuously working on enhancing its operations, including the integration of the Integrated Customs Management System (iCMS) with the iTax platform. This integration will streamline the verification process for imports, exports, and other related inputs, ensuring a smoother and more accurate refund process for businesses.
The improvements are also aimed at furthering collaboration with the private sector. Representatives from the Kenya Private Sector Alliance (KEPSA) and the Kenya Association of Manufacturers (KAM) have acknowledged KRA’s efforts in facilitating dialogue with stakeholders, ensuring balanced regulation, and driving trade efficiency. The collaboration has also seen the introduction of initiatives like expedited cargo scanning and customs automation, which have improved efficiency for both importers and exporters.
How KRA Refunds Taxpayers
The process for claiming refunds is straightforward. Taxpayers must file a claim online through the KRA website after submitting their tax return. They will need to select the relevant tax obligation and confirm their details. Once this is done, the taxpayer will provide bank information and upload any necessary supporting documents.
After submission, the claim is assigned to a KRA officer who reviews the information. A decision on the refund claim is typically made within 90 days. If the refund payment is delayed beyond two years, the taxpayer may be eligible for interest on the overdue amount.
Once the refund is approved, the amount is often applied to offset any other outstanding liabilities before physical payment is made. This helps businesses reduce their tax burden effectively while managing cash flow challenges.
The Benefits of the New Refund Cap
The new Ksh 40 million refund cap provides an excellent opportunity for businesses to access larger sums of money, which can be used for reinvestment or operational costs. The increase in the refund cap comes at a crucial time when businesses, especially SMEs, are recovering from the economic challenges brought about by inflation, the COVID-19 pandemic, and rising production costs.
This move by KRA is expected to strengthen the Kenyan economy by enhancing the ability of businesses to sustain and grow their operations. It also serves as a significant step toward reducing the financial burden on companies, which often face cash flow challenges due to long delays in processing refunds.
Conclusion
KRA’s decision to increase the refund cap to Ksh 40 million per month signals a commitment to supporting the growth of businesses in Kenya. The increase in funding, the integration of improved systems, and the increased collaboration with the private sector all point to a future of more efficient tax processes and stronger support for businesses.
As businesses continue to adapt to new economic realities, KRA’s reforms provide an important lifeline, offering quicker access to funds that can fuel further growth and expansion. This change is a welcome development for businesses in Kenya, and it sets a precedent for improved tax administration and more effective partnerships between the public and private sectors.
This initiative reaffirms KRA’s dedication to supporting Kenya’s business community and fostering an environment of transparent and efficient service delivery in tax administration.
