- KRA plans to collect over Ksh.4 trillion in the 2025/26 financial year
- Strategy focuses on new tax policies, better compliance, and less wastage
- Ministries and government departments are expected to raise more non-tax revenue
- Tax reforms also aim to support local production and investments
- Spending cuts and digital systems to improve transparency and efficiency
The Kenya Revenue Authority (KRA) has set a bold revenue collection target of over Ksh.4 trillion starting from the 2025/26 financial year, banking on a series of fresh policy changes, smarter tax administration, and increased non-tax income from government services.
According to the latest Budget Policy Statement, the government plans to cut down on borrowing by leaning more on domestic revenue mobilisation. This will be driven by new strategies that aim to make tax collection more effective, while also plugging the loopholes that lead to revenue losses.
Key to this plan is the rollout of the National Tax Policy alongside the Medium-Term Revenue Strategy (MTRS) for 2024/25 to 2026/27. These tools are designed to increase compliance, reduce unnecessary tax exemptions, and create a more efficient tax environment.
Supporting Policies, Spending Cuts, and PPPs in the Mix
The recently passed Tax Amendment Act, 2024, will also support the shift. It introduces reforms such as higher tax-free pension limits, relief for Post-Retirement Medical Funds, exemptions for pension benefits, and a tax amnesty plan to support compliance without placing heavy burdens on taxpayers.
To boost collections even further, ministries, departments, and agencies (MDAs) will be expected to contribute more through non-tax revenues, like service fees. Meanwhile, KRA will continue expanding the tax base and streamlining tax structures to encourage local investments and production.
On the other hand, the government will implement strict spending controls. Measures include austerity steps to limit recurrent expenses, the introduction of full e-procurement systems to ensure transparency, and the piloting of a new Human Resource Management System to better handle the public wage bill.
To support service delivery and lessen pressure on public funds, the government will also push more Public-Private Partnerships (PPPs) and speed up reforms within state corporations.
These plans together form a strong path toward sustainable economic growth and financial stability, as the government seeks to balance development needs with fiscal discipline.
