By the NGOs.ke Editorial Team
A Kenyan NGO gets its income tax exemption from the Kenya Revenue Authority by applying on iTax for a certificate under Paragraph 10 of the First Schedule to the Income Tax Act. Since 18 June 2024 that process has been governed by the Income Tax (Charitable Organisations and Donations Exemption) Rules, 2024 (Legal Notice No. 105 of 2024). To qualify, you must have operated for at least one year, exist solely for one of four charitable purposes, and upload a 13-item document pack. KRA says it will decide within 60 days if everything is in order. The certificate lasts five years.
That is the short answer. The details are where most applications stall, and as of September 2026 the grace period for older certificates has long ended. Organisations exempted under the old 2007 regulations had until 18 June 2025 to comply with the new Rules or risk revocation. If your finance team has not reread its exemption since then, this guide is for you.
Does your NGO even qualify for KRA tax exemption?
Being registered as an NGO, PBO, trust or society does not, on its own, make your income tax-free. Rule 9 of the 2024 Rules limits exemption to organisations established solely for one or more of four purposes:
- Relief of poverty. This covers livelihoods, community development, skills training and support that helps poor households become self-sufficient.
- Relief of distress of the public. This covers disaster relief, care for orphaned or abandoned children, addiction rehabilitation, healthcare for the needy, HIV prevention and care, water and sanitation, shelter and feeding programmes.
- Advancement of education. This covers schools, TVETs, bursaries and scholarships for the poor, and education for persons with disability.
- Advancement of religion.
Pay attention to what is missing from that list. A pure advocacy, governance or human-rights organisation may not fit neatly, and neither may a grant-maker. Rule 23 says KRA will not exempt an organisation that “exclusively funds, donates or supports other charitable organisations” without running a charitable activity itself. If your mandate is broad, your governing document needs to show exactly how your work falls under one of the four purposes.
The tests KRA applies
The Rules set out two tests that reviewers check against your documents.
- Organisational test (Rule 6). Your constitution or trust deed must state your primary charitable purpose, the activities you will run, your target beneficiaries, and an open, needs-based way of selecting them. It must also bar private benefit to founders, directors or their families, restrict assets to the charitable purpose, and send assets to a similar charity if you dissolve.
- Operational test (Rule 7). In practice, you must spend your time and money mainly on that purpose.
- Public benefit (Rule 8). Beneficiaries must be identifiable and able to attest to the benefit. People living in poverty must not be excluded. Membership-only benefit generally fails.
Fee-charging schools and health facilities face an extra hurdle. They must give full scholarships to at least 10% of students, or free treatment to at least 10% of patients, drawn from poor and needy backgrounds.
What documents does KRA require? The 2026 checklist
Rule 17 lists everything the application must include. Gather all of it before you open iTax, because missing items are the most common reason for delay.
| # | Document | Practical note |
|---|---|---|
| 1 | Certified governing documents (constitution, trust deed, M&A) | Must pass the Rule 6 organisational test. Amend first if needed. |
| 2 | Certified registration documents | PBO/NGO certificate, trust or society registration |
| 3 | Audited financial statements, last 3 years | Organisations under three years old should ask their Tax Service Office how to proceed |
| 4 | Schedule of assets with values | Match it to your audited balance sheet |
| 5 | Certified bank statements, last 3 years | All accounts, including project accounts |
| 6 | Introduction letter from the County Commissioner | From the county where your head office sits. Start this one early. |
| 7 | Impact report | Past, present and planned activities, and how they benefit Kenyan residents |
| 8 | Beneficiary definition and selection criteria | Written, needs-based, open to the poor |
| 9 | Itemised summary of payments | Payee, amount and purpose of each |
| 10 | Certified IDs of office bearers | Board chair, treasurer, secretary and similar |
| 11 | Proof of physical address | Lease or utility bill |
| 12 | Valid Tax Compliance Certificate | Plus the old exemption certificate if you are renewing |
| 13 | Authority letter for your representative | Needed if a staff member or tax agent files for you |
Item 12 catches many organisations out. You cannot get an exemption without a current Tax Compliance Certificate, and you cannot get a TCC with unfiled PAYE or unpaid withholding tax. Clear those first.
How do you apply on iTax, step by step?
KRA automated the process in 2021, so applications are online only.
- Log in to iTax with the organisation’s own PIN, not a staff member’s personal PIN.
- Go to Registration → Other Registration → Income Tax Exemption. This is the path given in KRA’s public notice.
- Complete the form and upload the 13 documents as clear, legible scans.
- Submit, then keep the acknowledgement receipt.
- Watch the organisation’s registered email address. KRA sends approved certificates there, and you can reprint them later through iTax’s consult-and-reprint function.
Under Rule 18, a complete application should be decided within 60 days. A new certificate takes effect from the date of approval, not the date you applied. Income you earn while waiting is not covered, so apply well before a large grant lands. If KRA declines, it must give written reasons. You then have 30 days to appeal to the Tax Appeals Tribunal (Rule 22).
What must you do after you get the certificate?
The certificate is valid for five years, but it can be revoked mid-term. The Rules add obligations that many finance teams still overlook:
- The 15% surplus cap (Rule 16). You may not retain more than an average of 15% of your funds over three consecutive years without spending them on your charitable purpose. Large unspent reserves or multi-year grants received upfront need a documented spending plan.
- No private benefit (Rule 14). Salaries and board fees must be reasonable for the sector and tied to services actually rendered.
- A separate PIN for unrelated business (Rule 25). If you run a café, rent out a hall as a regular trade, or sell consultancy unrelated to your mission, that income needs its own PIN and is taxable.
- An annual return (Rule 19). File an income tax return at least once a year, even when your income is exempt.
- Report constitution changes within 30 days (Rule 6(2)). Any amendment to your governing document goes to KRA within 30 days.
- Renew six months early (Rule 17(3)). If your certificate expires in April 2027, your renewal should already be filed by October 2026.
Remember that exemption covers income tax only. PAYE on staff salaries, withholding tax on consultants, and VAT all still apply. The Finance Act 2025, assented to on 27 June 2025, also added a VAT clawback where goods bought under an exemption are later used for other purposes. Most firms advising the sector now also recommend keeping eTIMS-compliant invoices for all expenses, since KRA can disallow unsupported costs.
What happens if KRA wants to revoke your exemption?
KRA must first send a notice of intention to revoke, explaining its reasons. You then have 30 days to respond and show what you have fixed (Rule 20). If you stay silent, the revocation is backdated to the start of the year in which the problem arose, and accumulated funds become taxable. Keep your contact email current and make sure someone actually reads it.
Why the certificate matters for fundraising
Local corporate donors can deduct gifts to you only if they hold proof under Rule 26. That proof includes a copy of your exemption certificate, evidence that you received the donation, an approved project proposal and budget, and your declaration that the funds will be used only for charitable purposes. Rule 26 also says a donor’s deductible gifts must come from taxable income and cannot create a tax loss. No more than 50% of a donor’s deductible donations in a year may go to unrelated entities.
In practice, a valid certificate is part of your pitch to Kenyan corporates. Keep a donor pack ready with the certificate, a template receipt and a signed charitable-use declaration. Our guide to writing a grant proposal for a Kenyan NGO covers the proposal-and-budget side. For the wider donor picture, see Kenya’s NGOs after USAID.
How does this fit with the PBO Act?
These are two separate systems. Registration with the regulator under the Public Benefit Organisations Act gives you legal status. It does not give you tax exemption. KRA decides that on its own criteria, and you need both. If your registration status or governing document is still unclear after the PBO transition, sort that out first, because KRA will ask for certified registration documents. Our explainers on what the PBO Act requires of NGOs and registering an NGO, CBO or trust in Kenya cover that step.
You can read the full text of the Rules, Legal Notice No. 105 of 2024, on KRA’s public notice page. For case-specific questions, contact your Tax Service Office or the KRA contact centre (020 4 999 999 / 0711 099 999). This guide is general information, not tax advice.
Frequently asked questions
How long does a KRA tax exemption certificate last?
Five years. Apply for renewal at least six months before it expires.
How long does KRA take to approve an NGO’s exemption?
The 2024 Rules say KRA should issue the certificate within 60 days of a complete application. Incomplete applications take longer.
Can a newly registered NGO apply for tax exemption?
Not straight away. A first-time applicant must have been in operation for at least one year. The Rules also ask for three years of audited accounts and bank statements.
Does tax exemption mean my NGO pays no taxes at all?
No. It covers income tax on qualifying income only. You still deduct and remit PAYE, withholding tax and other statutory deductions, and income from unrelated business is taxable under its own PIN.
Is PBO registration the same as KRA tax exemption?
No. PBO registration gives you legal status. Income tax exemption is a separate application to KRA under the Income Tax Act.
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