The Kenya Revenue Authority (KRA) is banking on a robust tax policy overhaul and revenue expansion strategies to meet an ambitious Ksh.4 trillion revenue target in the medium term, according to the 2025 Budget Policy Statement.
The authority is guided by the Medium-Term Revenue Strategy (MTRS) for 2024/25 to 2026/27, which outlines several key reforms aimed at enhancing domestic resource mobilization. Among the top priorities are the implementation of the National Tax Policy, rationalizing tax structures, sealing revenue leakages, and expanding the tax base to improve compliance.
Currently, tax expenditures such as exemptions and reliefs stand at 3.38 percent of GDP. KRA intends to reduce this through administrative reforms, which will ultimately add to revenue collection. Additionally, emphasis will be placed on minimizing tax expenditures and improving audit and enforcement mechanisms.
A major boost is expected from the newly passed Tax Amendment Act, 2024. The law introduces incentives that include increased tax-free pension contributions, exemptions for Post-Retirement Medical Funds, and a tax amnesty program. These measures aim to ease the tax burden for Kenyans while encouraging compliance and long-term saving.
Furthermore, the government aims to tap into non-tax revenues by empowering Ministries, Departments, and Agencies (MDAs) to raise funds through public service delivery. This is expected to diversify revenue sources and reduce overreliance on tax collections alone.
To ensure efficient use of public resources, the government has committed to austerity measures to cut recurrent expenditure. It will roll out an end-to-end e-procurement system to enhance transparency and ensure value for money in public procurement. A new Human Resource Management System is also set to be piloted and extended to all ministries and county governments to help manage the public wage bill.
The use of Public Private Partnerships (PPPs) for commercially viable projects will be expanded to improve infrastructure and service delivery. Governance reforms targeting state corporations will also be prioritized to ensure accountability and efficiency in the use of public resources.
These collective reforms are central to meeting the Ksh.4 trillion target while fostering economic stability and sustainable development.
