KRA Agency Fee Jumps 300% to 2% as Parliament Curbs Enforcement Powers

For markets and investors, the Finance Bill 2026 outcome delivers a dual signal: Parliament will not tolerate tax‑enforcement overreach that threatens corporate cash flows with prepayment‑before‑appeal rules, yet it is willing to fund KRA’s collection machinery more generously. The four‑fold increase in the agency fee for the Affordable Housing Levy—from 0.5% to 2%—means that a tax agency perennially struggling to meet revenue targets now has a new multi‑billion shilling carrot, potentially accelerating audits and digitalisation without the controversial coercive tools that businesses feared.

The National Treasury’s persistent campaign to arm the Kenya Revenue Authority (KRA) with sweeping enforcement tools has once again collided with Kenya’s legislative guardrails. In the Finance Bill 2026, Treasury sought to amend the Tax Procedures Act to allow KRA to access third‑party financial data, freeze bank accounts during active appeals, and require taxpayers to pay the full principal amount of any disputed tax before lodging an appeal. Last week, Parliament rejected these proposals, citing constitutional concerns and the need to protect citizens from an overzealous tax collector. This marks the fourth consecutive year that lawmakers have deflected Treasury’s push, creating a striking pattern of institutional conflict that reverberates across Kenya’s legal, economic, and political landscape.

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Additionally, Parliament approved an increase in KRA’s agency fee for collecting the Affordable Housing Levy from 0.5% to 2%, a four‑fold jump that promises to inject fresh resources into revenue mobilisation.

The immediate legislative outcome was not, however, a pure defeat for the tax agency. MPs granted KRA the ability to determine taxpayers’ liabilities, but only with the taxpayer’s consent—a concession that may streamline assessments in cooperative cases while preserving the principle of voluntary compliance. Additionally, Parliament approved an increase in KRA’s agency fee for collecting the Affordable Housing Levy from 0.5% to 2%, a four‑fold jump that promises to inject fresh resources into revenue mobilisation. These incremental wins reveal a legislature willing to tolerate a more efficient tax collector so long as core due‑process rights remain untouched.

From a regulatory history perspective, the contest over Section 42(14)(e) of the Tax Procedures Act is emblematic. That provision currently forbids KRA from recovering disputed taxes while an appeal is pending, effectively functioning as a statutory stay. Treasury’s proposal to delete this subsection, combined with a new clause mandating 100% prepayment of the disputed sum, would have flipped the burden onto taxpayers and fundamentally altered Kenya’s adversarial tax‑dispute system. Parliament’s refusal to entertain this shift preserves the status quo, where the judiciary—not the revenue authority—serves as the ultimate arbiter in contested assessments. The constitutional arguments raised by MPs, grounded in the right to fair administrative action and access to justice, resonate strongly in a jurisdiction where many taxpayers lack the liquidity to pay multi‑million shilling assessments upfront.