Filing annual accounts is a critical legal obligation for all businesses in Kenya. Compliance with the Kenya Revenue Authority (KRA) and the Registrar of Companies ensures financial transparency, avoids penalties, and maintains good corporate standing. Companies must adhere to strict deadlines when submitting financial statements and tax returns, using the prescribed online platforms such as KRA’s iTax system and the eCitizen portal.
This article provides a structured guide on when to file annual accounts in Kenya, the requirements, potential penalties for late filing, and the importance of timely submissions.
Annual accounts are financial statements that provide a clear overview of a company’s financial health. These include:
These financial reports are not only required for tax purposes but also help business owners, investors, and regulators assess the company's financial health.
Kenyan companies are required to file their financial statements with two key entities:
Deadline: Within 42 days after the Annual General Meeting (AGM).
Requirement: Companies must hold their AGM within six months after the end of their financial year. This means that annual returns should be filed no later than eight months after the financial year-end.
Example:
If a company’s financial year ends on December 31st, the AGM must be held by June 30th, and annual returns must be filed by August 11th.
Filing Platform: eCitizen Portal (ecitizen.go.ke).
Deadline: On or before the last day of the sixth month following the end of the financial year.
Requirement: Companies must file tax returns based on their declared financial results.
Example:
If a company’s financial year ends on December 31st, the corporation tax return must be filed by June 30th of the following year.
Filing Platform: KRA’s iTax System (kra.go.ke).
Failure to file annual accounts and tax returns on time results in legal and financial consequences.
Late Submission of Annual Returns:
Corporation Tax Late Filing Penalties:
Example of Late Payment Penalty:
If a company owes Kshs. 1,000,000 in taxes and files late, the minimum penalty would be Kshs. 50,000 (5% of tax due) plus additional interest.
Why Timely Filing Matters