Nairobi — The Kenya Revenue Authority (KRA) has scrapped mandatory Nil Returns and introduced a new "PIN with No Obligation" (PWO) category, marking a significant shift in Kenya's tax compliance framework.

The taxman says move is set to relieve thousands of non-earning Kenyans particularly students and individuals without taxable income from the annual requirement of filing Nil Returns, a process that has long been viewed as burdensome and unnecessary.

KRA says the enhancement to its iTax system allows both resident and non-resident individuals to register for a PIN without attaching any tax obligations, provided they are not engaged in income-generating activities.

The authority noted that the initiative is aimed at improving the integrity and accuracy of the taxpayer register while accommodating individuals who require a PIN for administrative purposes.

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"iTax has been enhanced to enable individual taxpayers to generate a PIN with No Obligation," KRA said.

"This is an initiative aimed at enhancing the integrity of the taxpayer register for individuals not engaged in taxable activities."

Under the new framework, holders of a PIN with No Obligation will not be required to file annual returns, effectively eliminating penalties associated with non-filing for this category.

However, KRA maintains that compliance obligations will automatically apply once such individuals begin earning taxable income.

The reform is expected to streamline tax administration while encouraging voluntary compliance by removing procedural barriers for individuals outside the tax net.

It also aligns with broader efforts by KRA to digitize services and enhance taxpayer experience through the iTax platform.

Applicants for the new category will be required to register through the iTax portal using a valid national identification card, with the system guiding users through the updated PIN application process.