[Kenya] Treasury proposes cuts to VAT, corporation taxes and PAYE rates

Kenya’s Cabinet Secretary (CS) John Mbadi has announced the National Treasury’s proposed tax cuts, allAfrica reports.

The plan includes reducing VAT from 16 to 14 per cent, cutting corporation tax from 30 to 25 per cent, and lowering pay-as-you-earn (PAYE) rates. The exact reduction for PAYE has yet to be specified.

This proposal reportedly forms part of the Treasury's medium-term revenue strategy, aimed at improving tax administration, enhancing compliance, and expanding the tax base.

Announcing the plan - during the unveiling of the 2025/26 Budget Preparation Process in Nairobi - CS Mbadi said, "I will surprise you; in the medium term, we want to reduce tax rates. We are not looking at increasing taxes." 

The Kenya Revenue Authority collected Sh313.37 billion in domestic VAT and Sh488 billion in corporation taxes for the financial year ending June 30, 2024.

The proposed tax cuts follow the suspension of the 2024 Finance Bill, which aimed to introduce Sh346 billion in new taxes but reportedly faced backlash and anti-government protests. The government cut expenditures by Sh177 billion in response and borrowed Sh169 billion to address the deficit, impacting key projects such as hiring junior secondary school teachers.

Source: allAfrica

(Quote via original reporting)

Kenya’s Cabinet Secretary (CS) John Mbadi has announced the National Treasury’s proposed tax cuts, allAfrica reports.

The plan includes reducing VAT from 16 to 14 per cent, cutting corporation tax from 30 to 25 per cent, and lowering pay-as-you-earn (PAYE) rates. The exact reduction for PAYE has yet to be specified.

This proposal reportedly forms part of the Treasury's medium-term revenue strategy, aimed at improving tax administration, enhancing compliance, and expanding the tax base.

Announcing the plan - during the unveiling of the 2025/26 Budget Preparation Process in Nairobi - CS Mbadi said, "I will surprise you; in the medium term, we want to reduce tax rates. We are not looking at increasing taxes." 

The Kenya Revenue Authority collected Sh313.37 billion in domestic VAT and Sh488 billion in corporation taxes for the financial year ending June 30, 2024.

The proposed tax cuts follow the suspension of the 2024 Finance Bill, which aimed to introduce Sh346 billion in new taxes but reportedly faced backlash and anti-government protests. The government cut expenditures by Sh177 billion in response and borrowed Sh169 billion to address the deficit, impacting key projects such as hiring junior secondary school teachers.

Source: allAfrica

(Quote via original reporting)