Treasury Cabinet Secretary (CS) John Mbadi has hinted at the government reducing the Value Added Tax (VAT) rates as a medium-term (3 years) measure of reducing overall taxes.
Mbadi in a statement on Monday, September 9 said that the government will be reducing VAT rates from 16% to about 14%, and corporate tax from 30% to 25%.
“We will reduce taxes in the medium term. VAT from 16.0% to about 14.0%. Corporate tax from 30.0% to 25.0%. Even PAYE,” said John Mbadi.
The CS was speaking during the ongoing launch of the Budget Preparation Process for the FY 2025/26 and the Medium-Term Plan by the National Treasury & Economic Planning at the Kenyatta International Convention Centre (KICC).
The move is part of a broader strategy to foster economic resilience, particularly in key sectors such as manufacturing, agriculture, and housing.
Mbadi speaks during launch of medium-term plan
The National Treasury CS was referring to the Medium-Term Revenue Strategy (MTRS) proposals.
Also Read: Mbadi Clarifies Finance Bill Taxes He Wants Reintroduced After Uproar
At the same time, the CS said that there will be no debt restructuring in this country, insisting that Kenya must pay its debt.
He emphasized that the government will not support any additional expenditures in the medium term, but will instead focus on improving efficiency, accountability, and the prudent use of resources.
Earlier in August, Mbadi clarified plans to reintroduce the Eco Levy, a tax previously rejected by a section of Kenyans in the dropped 2024 Finance Bill.
Mbadi while speaking in an interview on August 22 stated that the levy was not part of the clauses that will be brought back to parliament for consideration.
“Eco levy is not one of the things that we are considering bringing back. We are not bringing back Finance Bill 2024; it is buried and withdrawn. There were many clauses in that Bill that were rejected by Kenyans hence have no space under my regime. I have made it very clear to the President,” Mbadi said.
Also Read: KRA Lowers Tax on Whiskies, Wines, and Gin from UK
Mbadi further defended his comment on the levy, noting that it was misreported and that he was looking to understand why multinationals are complaining about it.
“I only asked a question because Emmanuel was asking me that Eco levy is contentious, he actually used the word that multinationals are complaining, so I asked, why are they complaining? Because I wanted to understand why they have a problem with eco levy,” he added.
Ruto on raising tax rates
President William Ruto had earlier in May defended the government’s plan to levy additional taxes on Kenyans, stating that it is part of a broader strategy to enhance the country’s revenue and reduce reliance on borrowing.
Ruto said that he intended to raise the country’s average tax rate from the current 14 percent to 16 percent by the end of this year and aims for a rate of between 20 and 22 percent by the end of his term in office.
While acknowledging the economic burden Kenyans will have to bear to achieve this target, Ruto said that he believes the long-term benefits will justify the increased taxes.
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