The Kenya Revenue Authority (KRA) is seeking wider enforcement powers that would allow it to crack down on employers who deduct pension contributions from workers’ salaries but fail to remit the money to retirement schemes.
Appearing before the National Assembly’s Departmental Committee on Finance and National Planning on Friday, KRA officials backed the KRA (Amendment) Bill, 2026, which proposes changes aimed at strengthening the authority’s revenue collection and enforcement mandate.
If approved, the Bill will enable KRA to take action against employers who deduct pension payments from their employee’s salaries yet fail to pass on the money to the relevant pension scheme.
The proposed Bill would allow the KRA to use certain recovery mechanisms used by the body against tax defaulters to recover unpaid pension contributions by employers.
These include issuing notice through agencies, getting garnishee orders, freezing bank accounts, and securing of property belonging to the delinquent employer.
The proposed law would help address the challenge that has been faced by employees whereby some realize after a number of years that pension contributions that have been deducted from their salaries had not been remitted by their employers.
According to official figures, the unremitted pension contributions totaled Ksh66.41 billion as of June 2026 compared to the previous estimate of Ksh72.5 billion. The amount includes deductions made by employers but not remitted to the respective pension benefit schemes.
The KRA also said that among the proposed changes to be made is an effort by the body to ensure consistency in the legislation it administers.
This involves making reference to repealed laws that KRA no longer administers.
Speaking before the committee in Kiambu on June 12, KRA Commissioner General Adan Mohamed said the country was still collecting taxes from a relatively small pool of taxpayers despite having significant untapped revenue potential.
“Chair, very few Kenyans carry the burden of taxation in this country. Only about 12,000 companies pay taxes due to them. This has to change,” Mohamed told lawmakers.
He pointed to rental income tax as one of the areas with considerable room for growth, noting that while the country has the potential to collect about Ksh100 billion annually, current collections stand at only Ksh16 billion.
The push for stronger enforcement comes as the National Treasury seeks to boost revenue collection in the 2026/27 financial year. Treasury has set KRA an ordinary revenue target of Ksh2.99 trillion.
Treasury Principal Secretary Chris Kiptoo has indicated that tax measures contained in the Finance Bill 2026 are expected to generate about Ksh98 billion in additional revenue, providing a significant boost to government collections.