National Treasury Cabinet Secretary John Mbadi has unveiled a comprehensive strategy the government is going to focus on aimed at raising over Ksh4 trillion in revenue.
The plan, which focuses on a mix of tax policy and administrative reforms, seeks to enhance the Kenya Revenue Authority’s (KRA) collection efforts while promoting economic activity.
In particular, the Government will focus on domestic resource mobilization efforts that intend to implement the National Tax Policy and a Medium-Term Revenue Strategy (MTRS) for the fiscal years 2024/25 to 2026/27.
In the Draft 2025 Budget Policy Statement published on Wednesday, January 15, key measures include strengthening tax administration for enhanced compliance through expansion of the tax base.
Mbadi Unveils Strategy to Raise Over Ksh 4 Trillion Revenue
The government will also leverage technology to revolutionize tax processes and seal revenue loopholes and enhance the efficiency of the tax system.
By addressing revenue leakages and improving tax efficiency, the government aims to strengthen compliance and generate additional income.
In addition to traditional taxes, the government will focus on non-tax revenues that Ministries, Departments and Agencies can raise through the services they offer to the public.
Also Read: Kenya Strengthens Global Fight Against Tax Avoidance by Ratifying Key Agreement
The Government will also sustain efforts to strengthen accountability, transparency and a revenue mobilization path guided by the Medium-Term Revenue Strategy – that makes the tax regime more efficient, equitable, and progressive.
“These deliberate efforts will be put in place to strike a right balance between the need to create a stronger and more reliable revenue stream and the need to protect the critical masses who have been grossly affected by the prevailing macroeconomic shocks,” read the policy in part.
According to Mbadi, implementation of the tax administrative reforms will target to reduce tax expenditures that now stand at 2.94% of GDP thereby adding revenues.
He added that the reforms will expand the tax base and strengthen tax compliance as envisaged under the MTRS and rationalize tax structure to promote domestic production and encourage investments.
Estimated Budget and Revenue for Next Financial Year
In the financial year 2025/26, Kenya’s total revenue, including Appropriation-in-Aid (A-i-A), is projected to rise to Ksh 3.52 trillion, representing 18.2 percent of the country’s Gross Domestic Product (GDP).
This marks an increase from the anticipated Ksh 3.06 trillion, or 16.9 percent of GDP, in the 2024/25 fiscal year.
Of this revenue, ordinary collections—mainly taxes and other government income—are expected to contribute Ksh 3.02 trillion (15.7 percent of GDP), up from the projected Ksh 2.63 trillion (14.6 percent of GDP) in the current financial year.
The total budget for the financial year 2025/26 is projected at Ksh 4.49 trillion.
Also Read: KRA Issues Update on Revised Calculation of Monthly Taxes
2025/2026 Projected Expenditure
Kenya’s overall expenditure and net lending for the financial year 2025/26 is projected to increase to Ksh 4.33 trillion, equivalent to 22.5 percent of the country’s GDP, up from the estimated Ksh 3.88 trillion or 21.5 percent of GDP in 2024/25.
The projected expenditure includes recurrent expenditure of Ksh 3.08 trillion, representing 16.0 percent of GDP, which will cover government operational costs.
Development expenditure is expected to account for Ksh 804.7 billion, or 4.2 percent of GDP, focusing on infrastructure and economic growth projects.
Additionally, Ksh 442.7 billion will be allocated to county governments to support their operations, while Ksh 5.0 billion will be set aside for the Contingency Fund to address unforeseen emergencies.
Follow our WhatsApp Channel and join our WhatsApp Group for real-time news updates
