NAIROBI, Kenya, Sep 9 – Treasury Cabinet Secretary John Mbadi is proposing the reduction of the value added tax from 16 percent to 14 percent as part of the Ministry’s medium-term revenue strategy aimed at improving tax administration.
In the proposal that is also meant to enhance compliance and expand the tax base, Mbadi rooted for the cutting of corporate tax from 30 percent to 25 percent, as well as the pay-as-you-earn.
“I will surprise you; in the medium term, we want to reduce tax rates. We are not looking at increasing taxes,” said CS Mbadi during the unveiling of the 2025/26 Budget Preparation Process in Nairobi.
For the financial year ending June 30, 2024, the Kenya Revenue Authority collected Sh313.37 billion in domestic VAT and Sh488 billion in corporation taxes.
The proposed tax cuts come after the suspension of the 2024 Finance Bill, which aimed to introduce Sh346 billion in new taxes but faced backlash and anti-government protests.
In response, the government cut expenditures by Sh177 billion and borrowed Sh169 billion to address the deficit, affecting key projects like hiring junior secondary school teachers.
