Draft Graduate Apprenticeship Tax Rebate Kenya: Essential Facts on the April 2026 Proposal (Not Yet in Force)

Updated 7 November 2026

The graduate apprenticeship tax rebate is an income tax incentive for employers who take on recent university or TVET graduates as apprentices. KRA has published draft Income Tax (Set-Off Tax Rebate for Graduate Apprenticeships) Regulations, 2026, which would let an eligible employer deduct an extra amount equal to 50% of the salaries and wages paid to graduate apprentices.

The graduate apprenticeship tax rebate terms below are proposals, not operative law. The draft text has no legal notice number and is not signed. KRA invited comments by 25 May 2026, and we found no gazetted final version on KRA’s site as of 7 November 2026.

Employers should not assume they can claim a rebate on these terms. This guide explains what the draft proposes on who would qualify, the conditions, the paperwork and the limits.

Sources: KRA public notice of 29 April 2026 on the draft regulations and the draft regulations text (dated 15 April 2026), read on 7 November 2026. Status: these are draft regulations; public comments closed on 25 May 2026. We could not confirm from KRA’s site whether a final version has been gazetted, so check with KRA or your tax adviser before relying on the details.

Graduate apprenticeship tax rebate: key points

Who counts as a graduate apprentice

The draft defines a graduate apprentice as a university or technical and vocational education and training (TVET) graduate bound by a written contract of apprenticeship to serve an employer for six to twelve months in a year of income. A contract of apprenticeship is a written agreement setting out the terms of apprenticeship and employment, including job training. Ordinary graduate trainee jobs without a registered contract would not qualify.

Which employers would be eligible for the graduate apprenticeship tax rebate

Any employer that pays tax under section 3 of the Income Tax Act can claim, subject to section 39B, unless its income is wholly exempt. “Employer” takes its meaning from the Industrial Training Act (Cap. 237). The Director-General referred to in the draft is the one appointed under section 4C of that Act.

Steps to qualify for the graduate apprenticeship tax rebate

1. Get permission first. An employer may not engage a graduate apprentice without the Director-General’s written permission.
2. Sign a contract. Before the apprentice starts, enter into a contract of apprenticeship for six to twelve months.
3. Register the contract with the Director-General. The draft says an unregistered contract is not binding.
4. Complete and certify. When the apprenticeship ends satisfactorily, submit a certificate of completion in the prescribed form to the Director-General and give the apprentice a copy. The Director-General then issues the apprentice a certificate of apprenticeship.
5. Claim the rebate in the income tax computation, but only once final regulations are in force and confirmed with KRA or a tax adviser.

The Director-General will also report to KRA every quarter with details of employers and apprentices, including their KRA PINs, the number of apprentices per employer and how long each was engaged. KRA can therefore check claims against registered contracts.

How the graduate apprenticeship tax rebate is calculated

The draft proposes that the employer would deduct a tax rebate equal to 50% of the salaries and wages paid to apprentices, in addition to the normal deduction for those wages. As an illustration only: if an employer pays an apprentice KSh 30,000 a month for 10 months, wages total KSh 300,000. The normal deduction is KSh 300,000, and the rebate adds another KSh 150,000 of deductible expenditure, so KSh 450,000 in total reduces taxable income. The actual tax saved depends on the employer’s tax rate and position, and the figures are our example, not KRA’s.

Graduate apprenticeship tax rebate records and limits (draft)

• Keep certified copies of each contract of apprenticeship and each apprenticeship certificate for five years from the end of the year of income.
• No rebate may be deducted on pay to an apprentice engaged for more than twelve months.
• Wholly exempt employers cannot claim.

Under the draft, missing permission, an unregistered contract or missing records could cost you the rebate. If KRA later disputes a claim, see our guides on objecting to a KRA assessment and KRA ADR.

Checklist for HR and payroll teams

• Keep the apprenticeship programme separate from ordinary graduate trainee hiring, so it is clear which staff the rebate covers.
• Get the Director-General’s written permission and register each contract before the apprentice’s first day.
• Set contract end dates within twelve months, and track any extension, because pay beyond twelve months gets no rebate.
• Code apprentice salaries and wages separately in payroll so the 50% figure can be worked out and backed up.
• File the completion certificate promptly and keep certified copies of the contract and certificate for five years.
• Make sure apprentice PINs in your records match those the Director-General reports to KRA.

Frequently asked questions

How much is the graduate apprenticeship tax rebate?

The April 2026 draft proposes an extra deduction equal to 50% of salaries and wages paid to graduate apprentices. It is not confirmed as operative law.

How long must an apprenticeship last to qualify?

Six to twelve months under a registered written contract. No rebate applies to pay for apprentices engaged beyond twelve months.

Do TVET graduates qualify?

Yes. The draft covers both university and TVET graduates.

Are the 2026 regulations in force?

Not as far as we could verify. KRA published them as a draft on 29 April 2026, with comments due by 25 May 2026. The draft has no legal notice number, and we found no gazetted final version as of 7 November 2026. Do not claim under them until KRA confirms they are in force.