KRA tightens disability exemption rules amid revenue pressure

The Kenya Revenue Authority (KRA) has tightened the requirements for persons with disabilities seeking income tax exemptions, introducing mandatory medical assessments and a tiered system for determining eligibility.

The new measures are contained in the Income Tax (Persons with Disabilities, Parents or Guardians Tax Exemptions) Regulations, 2026, published by the National Treasury and reviewed by The Standard. They replace a 2010 legal order and establish a seven-member assessment committee comprising representatives from KRA, the National Council for Persons with Disabilities and the medical profession.

The committee will oversee the assessment of applicants and determine their eligibility for tax exemptions under the new framework.

The changes have raised concerns over possible discrimination, with critics questioning whether the additional medical requirements could make it harder for some persons with disabilities to access tax relief.

Under the new rules, applicants must appear physically before the exemption assessment committee at designated centres, submit to a disability medical assessment conducted by a government-appointed panel. They also must provide a specialist medical report, proof of income and for employees, an employer letter detailing how the disability affects their work. The committee meets at least quarterly.

Exemptions are capped at Sh150,000 monthly, with the actual amount determined as a percentage of that limit based on disability severity.

The First Schedule awards 0 per cent for mild impairments, 30 per cent for moderate, 60 per cent for severe and 100 per cent for profound or complete disability across vision, speech, physical, intellectual and hearing categories, using a disability rating scale from the Ministry of Health.

KRA reckons the new rules bring clarity and eliminate loopholes where people could claim exemptions without proper verification.

But disability rights advocates argue the requirement to appear personally to prove disability is humiliating and discriminatory, particularly for those with mobility impairments or in remote areas.

"Requiring a person with a disability to physically appear to prove their disability, when they already hold a registration certificate from the National Council, is an affront to dignity," said a Nairobi-based disability rights lawyer who spoke anonymously. "The Persons with Disabilities Act recognises that registration, and this creates a second layer of bureaucratic burden that many cannot afford."

The regulations introduce a five-year validity period for certificates, renewal applications 90 days before expiry, and a Sh1,000 non-refundable processing fee for parents and guardians.

Persons certified with permanent disabilities are exempted from future medical assessments and renewals entirely.

Parents or guardians of persons with severe disabilities can claim an exemption of Sh10,000 above the income already exempt from tax per month, limited to one caregiver per household unless the Cabinet Secretary approves otherwise.

Critics also point to the Sh1,000 processing fee, which they say penalises poor families caring for children with severe disabilities, and the 0 per cent exemption for mild impairments, which effectively denies benefit to those who still face significant daily limitations.

The regulations empower the Commissioner to revoke certificates obtained through fraud or misrepresentation, with 14 days' notice to show cause. Persons who fail to notify KRA of changes in status within 30 days commit an offence, punishable by a fine of up to one million shillings or six months' imprisonment.

A transitional clause stipulates that anyone currently  enjoying an exemption but who does not meet the new criteria shall cease to enjoy it once the regulations are gazetted, a provision that could remove benefits from existing beneficiaries overnight.

The Cabinet Secretary may review decisions within 30 days, and appeals may be filed with the Tax Appeals Tribunal. Records are to be maintained under the Data Protection Act.

The changes come as KRA is racing to collect an average of Sh282.25 billion every month from November through June to meet its Sh3.268 trillion full-year target, after collecting Sh1.010 trillion by end-October.

Treasury data shows that ordinary revenue has missed target in nine of the past 11 years, with tax expenditures, including exemptions, totalling to Sh262.6 billion in 2025.

Treasury's draft 2027 Budget Policy Statement warns that continued revenue underperformance "may widen the fiscal deficit and increase the Government's borrowing requirements," raising public debt and future debt service obligations. Debt service already consumes nearly half of ordinary revenue, with interest payments projected at 42 per cent of ordinary revenues in FY2026/27.

KRA attributes October's performance to non-oil taxes and above-target collections across domestic VAT, excise, corporation tax and individual income tax. But whether the taxman can sustain a monthly pace above its historic high through the typically weaker second and third quarters will determine whether the Sh3.268 trillion target holds.

The disability exemption regulations take effect amid that fiscal squeeze, placing the revenue authority in the uncomfortable position of tightening benefits for a vulnerable group while chasing an ambitious collection target ahead of the August 2027 elections.