Treasury Cabinet Secretary John Mbadi. Photo/courtesy.
The government is set to raise an additional Sh177 billion in the 2025/26 fiscal year by intensifying tax enforcement and expanding the tax base.
This move is part of the government’s plan to steer away from introducing new tax hikes that previously led to widespread protests
Treasury Cabinet Secretary John Mbadi announced that the Kenya Revenue Authority (KRA) will be tasked with increasing collections to Sh2.757 trillion. Only Sh25–30 billion is expected from new measures in the 2025 Finance Bill, with the remainder targeted through administrative reforms.
“The finance bill doesn’t have to always adjust tax rates upwards,” Mbadi stated during a televised meeting. “This year’s finance bill focuses more on tax administration and sealing loopholes to make tax collection efficient.”
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One significant proposal involves granting KRA access to personal data held by third parties, including banks and mobile platforms, to detect tax evasion. While critics have raised privacy concerns, Mbadi defended the move, arguing that many wealthy individuals exploit legal protections to avoid paying taxes.
Additionally, the Finance Bill 2025 proposes moving certain goods from zero-rated to tax-exempt status, limiting firms’ ability to claim VAT refunds, and effectively raising taxation. Treasury CS Mbadi noted that this amendment aims to reduce fictitious tax refunds, stating that the country has been losing billions of shillings to firms and suppliers claiming input tax.
The government’s strategy reflects a broader balancing act: increasing state revenues while avoiding public backlash. With the fiscal deficit expected to narrow to 4.5 percent of GDP, the budget’s Sh4.23 trillion target will also rely on domestic and external borrowing.
