Treasury Cabinet Secretary John Mbadi has raised Kenyans’ hopes of enjoying lower taxes in the near future, after revealing that the government is considering reducing Pay As You Earn (PAYE) rates and corporate taxes.
However, he has made it clear that any such relief hinges on the success of ongoing reforms at the Kenya Revenue Authority (KRA).
Speaking during a session in the Senate on Wednesday, CS Mbadi disclosed that the National Treasury had conducted simulations aimed at reducing PAYE and corporate tax from the current 30% to 28% as it drafted the Finance Bill 2025.
However, the proposals were put on hold due to KRA’s underperformance in meeting revenue targets.
“We even did some simulations on how to reduce the PAYE. But what stopped us from implementing it with this finance bill… was the failure by KRA to meet its revenue targets,” Mbadi told Senators.
He explained that while the Treasury is committed to easing the tax burden on Kenyans and the business community to increase disposable income and support economic growth, such measures will only be introduced once KRA proves capable of raising sufficient revenue through its ongoing structural reforms.
“As we carry along with the reforms at the KRA, we should not be doing too many things at the same time. First, let us see what the reforms at KRA in terms of automation and in terms of making it efficient are yielding to us,” he added.
The remarks come at a time when the National Assembly is set to consider the Finance Bill 2025.
Mbadi’s statement indicates that the Treasury sees a phased approach as more prudent, first stabilising revenue collection mechanisms at KRA, then potentially implementing tax reliefs in the 2026 Finance Bill.
If realised, the move could provide much-needed relief to millions of Kenyan workers and businesses grappling with high costs amid slow economic recovery.
0 Comments