KRA CLARIFIES TAXING BANK AND M-PESA DEPOSITS

The Kenya Revenue Authority (KRA) has clarified reports suggesting that all deposits in bank and mobile money accounts will be taxed, insisting that only undocumented deposits will be treated as taxable income.
In a statement, KRA explained that deposits lacking credible documentation—such as proof of loans, shareholder capital injections, or customer advances—fall under taxable income in line with Section 3 of the Income Tax Act.
The clarification follows a Tax Appeals Tribunal ruling in the case of Kirin Pipes Ltd, where the company failed to prove that deposits amounting to millions were genuine loans or capital injections. The Tribunal upheld KRA’s decision to tax KSh54 million of the funds.
KRA further indicated that the same principle extends to M-Pesa transactions, stressing that mobile money deposits must also be supported with proper records to avoid being classified as taxable.
At the same time, the Authority dismissed fears that it is seeking direct access to personal bank or M-Pesa balances, stating that it only requires transaction-level data for tax administration.
Tax experts have urged Kenyans to maintain thorough documentation—such as loan agreements, shareholder resolutions, CR12 updates, invoices, and repayment records—to safeguard against unnecessary tax exposure.