The Kenya Revenue Authority (KRA) has ordered the removal of thousands of taxpayers from a controversial compliance blacklist after acknowledging that the system had been misused and was harming legitimate businesses.
- •In an internal memo dated 10th March, Acting Deputy Commissioner Michael M. Kasingiu directed staff in the authority’s East and South region to remove all taxpayers placed on the “Special Table” for reasons unrelated to tax fraud or missing trader schemes by 12th March.
- •The Special Table was introduced as a compliance tool intended to deter tax evasion and criminal activity.
- •The tax authority acknowledged that the approach led to abuse of the system and the punishment of legitimate taxpayers rather than facilitating business activity and voluntary compliance.
Under the new directive, the authority will discontinue routine placement of taxpayers on the list. The mechanism will be reserved exclusively for cases involving missing trader schemes, a form of VAT fraud involving fictitious supply chains used to claim fraudulent tax credits.
Any future addition of a taxpayer to the Special Table will require a formal submission describing the scheme, routed through a manager and chief manager before approval by a deputy commissioner.
Relationship managers have been instructed to notify affected taxpayers of their removal from the list and outline compliance expectations going forward.
“Please note that placing taxpayers on the special table has been discontinued forthwith. The only exception to this rule is taxpayers engaging in the missing trader scheme either as beneficiaries or facilitators or taxpayers involved in tax fraud,” the memo stated.
Taxpayers on the list could have value-added tax (VAT) refunds halted, tax compliance certificates frozen, and access to government tenders effectively blocked.
The use of the VAT Special Table has faced both systemic and company-specific legal challenges. A constitutional petition filed in May last year argued that the Special Table lacked statutory backing, denied businesses the right to claim input VAT, and violated constitutional protections for fair administrative action and hearing.
The case, brought by tax agents on behalf of affected taxpayers, sought urgent suspension of the tool and a judicial review of KRA’s powers and procedures, framing the Special Table as a broader threat to business rights.
Separately, a company called Milele Tents Limited challenged its own placement on the Special Table before the Tax Appeals Tribunal later in 2025. The tribunal dismissed the company’s application, noting it had failed to appeal within the required 30-day window and that the tribunal could not grant anticipatory relief against an internal administrative action.
The ruling affirmed KRA’s discretion to place firms on the Special Table as an administrative compliance tool, highlighting that enforcement can proceed swiftly while leaving recourse for taxpayers only after a formal tax determination is issued.
