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Mbadi Announces Plans to Reduce VAT & Other Taxes

by Edwin Hinda
October 7, 2024
Reading Time: 3 mins read
National Treasury CS John Mbadi during a discussion with British High Commissioner to Kenya, Neil Wigan on August 21, 2024. PHOTO/ Mbadi X. Saudi Arabia. Government Spokesperson Isaac Mwaura during a past press conference. PHOTO/ Mwaura X.

National Treasury CS John Mbadi during a discussion with British High Commissioner to Kenya, Neil Wigan on August 21, 2024. PHOTO/ Mbadi X.

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National Treasury Cabinet Secretary (CS) John Mbadi has announced that the government has a strategy to reduce the amount of taxes paid by Kenyans. 

Speaking during the KRA Summit on Monday, October 7, Mbadi stated that the government is adopting the medium-term revenue strategy.

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He explained that the strategy promotes investments by removing market distortions through the rationalization of tax expenditures.

For instance, the CS mentioned that the strategy proposes to reduce corporate tax from 30 percent to 25 percent. According to Mbadi, the plan is to ensure that the benefits of such a reduction are passed to the economy by creating more jobs.

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Additionally, Mbadi stated that the plan will help reduce Value Added Tax (VAT) and other taxes in the long run. He emphasized that the government’s objective is to reduce taxes and not increase the burden on Kenyans.

Kiharu MP Ndindi Nyroro with National Treasury CS John Mbadi. PHOTO/Nyoro X.
Kiharu MP Ndindi Nyroro with National Treasury CS John Mbadi. PHOTO/Nyoro X.

“That is where we are headed. If possible, we should reduce our VAT from 16 percent to 14 percent, along with other tax rates,” he said.

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“The government policy is not to increase taxes; it is to reduce taxes, but that will only be possible if we expand the tax base and become more efficient in tax collection and resource usage.”

Mbadi on Fiscal Deficit

Moreover, Mbadi mentioned that the strategy will strengthen the policy dimension of the country’s fiscal consolidation process, targeting the East African Community Convergence criteria of a fiscal deficit of 3 percent of GDP.

He announced that the government’s final budget in this term must have a fiscal deficit of no more than 3 percent.

The CS explained that the government can achieve a balanced budget for 2027/2028 if it is ambitious enough.


Also Read: Why Pay Tax? African Study Finds Trust in Government Is Key


Revenue Mobilization

Mbadi further elaborated that the strategy proposes several initiatives to enhance revenue mobilization, including tax base expansion, modernization of tax legislation, and consolidation of tax procedures.

“We will continue intensifying debt collection efforts, utilizing data to improve compliance, and enhancing intelligence gathering to close revenue loopholes,” he said. He reiterated the government’s commitment to the fiscal consolidation policy aimed at reducing fiscal deficit and debt accumulation.


Also Read: Win for Kenyans as Mbadi Reveals Plan to Reduce VAT


Tax Malpractices

Mbadi also highlighted the issue of tax malpractices, stating that they hinder the government’s ability to secure the financial resources necessary for structural transformation and sustainable growth.

“Illicit financial flows, including money laundering, tax evasion, and corruption, pose significant challenges to tax administration, especially in developing countries like ours. We must therefore prioritize policies that empower tax administrations to combat these issues and leverage international tax frameworks to address illicit financial flows,” he said.

He emphasized that the government must embrace technology, which is essential to addressing the modern challenges faced by tax administrations.

Follow our WhatsApp Channel for real-time news updates:

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Ndindi Nyoro asked KRA to stop more taxes . Mbadi
KRA Commissioner General Humphrey Wattanga. PHOTO/KRA.

 

Tags: John MbadiKRA

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Edwin Hinda

Edwin Hinda

Edwin Hinda is a versatile and creative journalist with a keen interest in politics, sports, education, international affairs, entertainment, and soft content. With a degree in Communication and Media Technology (Print Option) with IT from Maseno University, Edwin brings a well-rounded academic background to his work. He excels in conducting thorough interviews and in-depth research, ensuring that his stories are both informative and engaging. He can be reached at edwin.hinda@thekenyatimes.com

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Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
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