In Kenya, the law is clear: most organisations are required to retain tax-related records for five years. But what many businesses don’t realise is that meeting this legal minimum does not necessarily protect them from Kenya Revenue Authority (KRA) audits or penalties — especially if fraud is suspected.

At The Filing Room, we work with organisations to ensure that their record-keeping practices don’t just meet legal requirements, but protect them from risk. Because in practice, five years isn’t always five years.

What the Law Says

The Tax Procedures Act in Kenya harmonised the retention period for most tax records to five years — down from the previously required seven years for Income Tax and Excise Duty. This means that, for day-to-day compliance, taxpayers are expected to retain:

  • Copies of tax returns and assessments

  • Invoices and receipts

  • Payment records

  • Contracts and supporting documentation

  • Financial statements and audit reports

This five-year timeline begins from the end of the reporting period to which the documents relate.

What the Law Allows: The Fraud Clause

While the five-year rule seems straightforward, there’s a significant — and often misunderstood — exception.

If fraud, gross negligence, or willful misrepresentation is suspected, KRA is legally permitted to go back indefinitely. In these cases, there is no limit to how far back they can demand records, and they may request documents from 10, 20, or even 30 years ago.

Because “fraud” is broadly interpreted under the law, even simple mistakes — such as undocumented income, poor archiving, or failure to produce historical payment records — can be construed as intentional wrongdoing.

The Cost of Non-Compliance

If KRA deems you to have committed fraud, the consequences are severe:

  • A 200% penalty on the tax evaded

  • 1% monthly interest, compounded

  • Ongoing legal exposure and reputational damage

Crucially, the burden of proof rests with the taxpayer. That means if you can’t produce documentation to back up historical filings, you may have no way to defend yourself.

Why You Need Long-Term Document Retention

Although the law says five years, the practical and legal reality in Kenya is different. We strongly recommend that businesses retain core tax and financial documents well beyond this window, especially:

  • Ownership records and asset transactions

  • Records for periods with historically high revenue or unusual tax claims

  • Employment and payroll documentation

  • Historic audit findings or disputed tax periods

Digitising and indexing these records is a practical way to ensure long-term accessibility — but paper originals may also need to be preserved in some cases.

How The Filing Room Helps Safeguard Your Organisation

With over 25 years supporting financial institutions, NGOs, law firms, and corporations in Kenya, we understand the serious implications of poor documentation — and how to avoid them.

Our services include:

  • Secure Off-Site Storage: Climate-controlled, access-controlled facilities with barcode tracking

  • Digitisation & Indexing: High-quality scanning with metadata and search functions

  • Certified Destruction: Ensuring documents are only destroyed after approved timelines and with documentation

  • Records Management Consultancy: Helping organisations define compliant, risk-based retention schedules

We help organisations create practical, defensible systems — so if KRA ever comes knocking, you’re prepared.

Final words 

Tax compliance in Kenya requires more than following the letter of the law. In an environment where the risk of retrospective audits is real — and the penalties are steep — organisations must treat records retention as a strategic priority.

At The Filing Room, we help you comply with the law — and prepare for the unexpected.

If you’d like to discuss how to align your tax record practices with both compliance and risk management, contact us at:

📧 info@filingroomkenya.com
📞 +254 20 2663263
🌐 filingroomkenya.com