Kenya’s tax system has limited trust and support from taxpayers, leading to low compliance levels, submissions to the National Assembly Finance Committee say.
According to a memorandum prepared by the Institute of Public Finance (IPF) in partnership with the Kenya Women Parliamentary Association (Kewopa) has indicated that, as much as Kenyans recognise the importance of taxes in funding public services, they remain uncertain whether new tax measures will lead to tangible improvements in service delivery.
This, they said, calls for credible, evidence-based policy decisions, adding that both the National Tax Policy and the Medium-Term Revenue Strategy (MTRS) emphasise the importance of using regular studies to guide tax reforms and legislation.
“The government on the MTRS had committed to conducting studies and review on implementation of rental income tax regime, tax exemptions and reliefs, implementation of a minimum tax, review personal income tax band, optimal taxation of petroleum products, tax structure of alcoholic and tobacco products, carbon taxation, and develop a tax expenditure framework to guide granting, monitoring and evaluation of tax incentives,” the document says.
It says that some measures in the Finance Bill, 2025 are welcome, such as the clean-up of the Value Added Tax (VAT) Act, and proposal to increase the tax-free per diem from Sh2,000 to Sh10,000 per day that will enhance employees’ take-home pay.
Kewopa and IPF also say expanding the personal income tax deduction to cover interest on loans used for constructing residential houses, rather than limiting it to the purchase or improvement of such houses, is commendable.
They have also commended National Treasury for shifting focus away from introducing new tax measures and instead concentrating on improving tax administration, even though several proposals in the Bill remain contentious.
These include repeal of key data protection provisions, which would allow the Kenya Revenue Authority (KRA) to access personal data and trade secrets held by businesses raising significant privacy and confidentiality concerns.
“The proposed extension of VAT refund timelines from 90 to 120 days for standard applications, and from 120 to 180 days for cases requiring audits, could severely strain business cash flows and erode trust in the tax refund system.
Kenya’s tax system has limited trust and support from taxpayers, leading to low compliance levels, submissions to the National Assembly Finance Committee say.
According to a memorandum prepared by the Institute of Public Finance (IPF) in partnership with the Kenya Women Parliamentary Association (Kewopa) has indicated that, as much as Kenyans recognise the importance of taxes in funding public services, they remain uncertain whether new tax measures will lead to tangible improvements in service delivery.
This, they said,
calls for credible, evidence-based policy decisions, adding that both the National Tax Policy and the Medium-Term Revenue Strategy (MTRS) emphasise the importance of using regular studies to guide tax reforms and legislation.
“The government on the MTRS had committed to conducting studies and review on implementation of rental income tax regime, tax exemptions and reliefs, implementation of a minimum tax, review personal income tax band, optimal taxation of petroleum products, tax structure of alcoholic and tobacco products, carbon taxation, and develop a tax expenditure framework to guide granting, monitoring and evaluation of tax incentives,” the document says.
It says that some measures in the Finance Bill, 2025 are welcome, such as the clean-up of the Value Added Tax (VAT) Act, and proposal to increase the tax-free per diem from Sh2,000 to Sh10,000 per day that will enhance employees’ take-home pay.
Kewopa and IPF
also say expanding the personal income tax deduction to cover interest on loans used for constructing residential houses, rather than limiting it to the purchase or improvement of such houses, is commendable.
They have also commended National Treasury for shifting focus away from introducing new tax measures and instead concentrating on improving tax administration, even though several proposals in the Bill remain contentious.
These include repeal
of key data protection provisions, which would allow the Kenya Revenue Authority (KRA) to access personal data and trade secrets held by businesses raising significant privacy and confidentiality concerns.
“The proposed extension of VAT refund timelines from 90 to 120 days for standard applications, and from 120 to 180 days for cases requiring audits, could severely strain business cash flows and erode trust in the tax refund system.
By Irene Githinji