John Mbadi Vows To Reduce VAT, PAYE And Other Tax Rates In FY25/26

• Treasury Cabinet Secretary (CS) John Mbadi announced measures to enhance revenue collection and the government's fiscal policies
• Mbadi said his administration will cut some tax rates to enhance compliance and increase the tax base
• Some of the taxes Mbadi targets include the 16% VAT, Corporation tax and PAYE, which he said will reduce significantly
• The CS cited issues with increased budget deficit, which hit KSh 767 billion in the financial year 2024/25

TUKO.co.ke journalist Wycliffe Musalia has over five years of experience in financial, business, and technology reporting and offers deep insights into Kenyan and global economic trends.

Treasury Cabinet Secretary (CS) John Mbadi has announced plans to cut tax rates and improve compliance.

Mbadi said his office is working on modalities to enhance domestic revenue mobilisation by the Kenya Revenue Authority (KRA) over the medium term.

Why reduced tax rate will enhance KRA's collection

Speaking during the launch of the 2025/26 Budget Preparation Procedure on Monday, September 9, CS Mbadi noted that the move will create tax rates that build the tax base and enhance compliance.

"In the medium term, we want to reduce tax rates. We are going to reduce VAT from 16% to about 14%, corporate tax from 30 to 25%, PAYE and other taxes," said Mbadi.

Mbadi explained that the work of the Treasury is not to increase the tax rate but to reduce it.

This is part of the National Treasury's medium-term revenue strategy, which comes at time the government is struggling to balance its fiscal deficit.

President William Ruto withdrew the Finance Bill 2024 after bowing to pressure from nationwide protests in June.

This saw the country's deficit hit KSh 767 billion, up from the projected KSh 597 billion.

The government implemented measures aligning with the priorities of available resources and collected revenue.

Which other tax measures has John Mbadi introduced?

The National Treasury launched the 2024/25 Budget Preparation Procedure, defining measures to enhance revenue collection.

Treasury Cabinet Secretary (CS) John Mbadi highlighted the medium-term revenue strategies that will reduce the budget deficit.

Among the policies are increasing tax collection, easing interest rates, and reducing expenditures.

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John Mbadi said the work of the Treasury is to ensure reduce tax rates for compliance.

John Mbadi Vows to Reduce VAT, PAYE and Other Tax Rates in FY25/26

Treasury CS John Mbadi proposes reduction of VAT to 14% : Now