The Kenya Revenue Authority (KRA) has officially announced a major shift in how employers will file Pay As You Earn (PAYE) returns, with the new system set to take effect on July 1, 2025.

In a notice on Monday, June 23, 2025, the taxman indicated that the new system is aimed at improving the user experience.

“Kenya Revenue Authority (KRA) has simplified the PAYE return filing and payment process to align with the simplified return from taxpayers to improve the user experience for all, including the public, non-profit, and private sectors,” Read part of the notice in their official X account dated June 23, 2025.

Excel-based return template unveiled

Under the theme “KRA Simplifies the PAYE Return Filing Process,” the tax agency has introduced a streamlined, Excel-based PAYE return template that replaces the current filing method.

Besides enhancing the user experience for employers in the public, private, and non-profit sectors, it also aims to support broader reforms in tax administration.

According to the public notice issued, the simplified process integrates with key government systems such as the Integrated Management Information System (iMIS) and the Central Bank of Kenya (CBK) through API connections.

This allows for seamless deduction and remittance of statutory contributions, including the Affordable Housing Levy, NITA Levy, and other PAYE-related deductions, tailored to various employee categories.

July 1 deadline for employers to comply

KRA has directed all employers to adopt the new format starting July 1, 2025. To ease the transition, the simplified Excel return form and a sample CSV file have been made available on the authority’s website under the publications section: www.kra.go.ke.

Employers are encouraged to align their payroll systems with the new format before the effective date to avoid non-compliance.

The overhaul follows persistent calls for reform, dating as far back as 2020, and comes on the back of successful digital interventions such as the Electronic Tax Invoice Management System (eTIMS), which helped reduce VAT fraud by 15 per cent in 2023.

The update is a continuation of KRA’s wider digital transformation agenda in line with the 2022 National Tax Policy, aimed at closing Kenya’s tax revenue gap—currently estimated at 6 per centof GDP.

It also complements innovations like GAVA Connect, a government API platform launched in 2024 to support local developers in enhancing access to digital public services.

The public notice, signed by the Commissioner for the Micro and Small Taxpayers Department, reaffirms KRA’s push for industry-specific, tech-enabled solutions that enhance compliance and ease of doing business.

As the rollout date nears, employers are urged to act swiftly and embrace the new system to ensure a seamless transition.