KRA Seeks Sweeping New Powers to Crack Down on Employers Holding Workers’ Pension Cash as Treasury Targets Trillions in Revenue
The Kenya Revenue Authority (KRA) has moved to significantly expand its enforcement powers, seeking authority to pursue employers who deduct pension contributions from workers’ salaries but fail to remit the funds to retirement schemes.
Appearing before the National Assembly’s Departmental Committee on Finance and National Planning, KRA officials urged lawmakers to support the proposed KRA (Amendment) Bill, 2026, arguing that the changes are necessary to strengthen revenue collection and protect employees from losing hard-earned retirement savings.
If passed, the legislation would allow the taxman to deploy the same aggressive recovery mechanisms used against tax defaulters to recover unremitted pension contributions. These measures include issuing agency notices, obtaining garnishee orders, freezing bank accounts and preserving assets belonging to non-compliant employers.
The proposal comes amid growing concerns over billions of shillings deducted from employees’ salaries that never reach pension schemes, leaving many workers vulnerable and only discovering missing contributions years later when approaching retirement.
Official figures show that as of June 2026, unremitted pension contributions stood at KSh66.41 billion, down from a previous peak of KSh72.5 billion. The outstanding amount largely comprises deductions already taken from employees’ paychecks but not forwarded by employers to the respective retirement benefit schemes.
KRA says the proposed amendments are designed not only to improve compliance but also to close enforcement gaps that have allowed some employers to retain funds intended for workers’ retirement savings.
The Bill further seeks to align the KRA Act with current legal frameworks by removing references to repealed laws and statutes that the authority no longer administers.
According to the tax agency, several provisions within the existing law have become outdated and no longer reflect the institution’s evolving mandate, creating legal inconsistencies that hamper effective administration.
During the committee session on June 12, KRA Commissioner General Adan Mohamed warned that the country’s tax burden continues to be carried by a relatively small number of taxpayers.
“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 legislators.
He further highlighted the gap between Kenya’s tax potential and actual collections, particularly in the real estate sector.
“For instance, while we have the potential to collect KSh100 billion from rental income tax, we are only collecting KSh16 billion,” he added.
The push for stronger enforcement powers comes as the government seeks to raise revenue to finance the 2026/27 budget.
For the upcoming financial year, the National Treasury has tasked KRA with collecting KSh2.99 trillion in ordinary revenue. Treasury Principal Secretary Chris Kiptoo has indicated that proposed measures contained in the Finance Bill 2026 are expected to generate approximately KSh98 billion in additional revenue, providing a major boost to government coffers.
The proposed reforms now await parliamentary scrutiny, with lawmakers expected to weigh concerns over expanded enforcement powers against the need to protect workers’ retirement savings and improve tax compliance across the economy.