Treasury Cabinet Secretary John Mbadi has announced a three-year plan to reduce taxes, aiming to alleviate the financial burden on Kenyan citizens.
The plan, revealed during the launch of the Financial Year 2025/26 Budget Preparation Process at the Kenyatta International Convention Centre, includes a reduction in Value Added Tax (VAT) from 16% to 14% and a cut in corporate tax from 30% to 25%.
Mbadi emphasized that the tax cuts are part of a broader strategy to bolster economic resilience, particularly in key sectors such as agriculture, manufacturing, and housing, while ensuring no additional expenditures are supported in the medium term.
Despite fiscal constraints, the government is committed to prioritizing growth, expanding opportunities, and focusing on sectors critical for economic recovery.
Agriculture will remain at the forefront of this strategy, driving manufacturing and overall economic growth, with special attention given to supporting small and medium enterprises (SMEs) and affordable housing projects.
Mbadi outlined the Fourth Medium Term Plan, which targets transforming the MSME economy, healthcare, housing, and the digital superhighway, indicating a dedicated push to create a favorable environment for these sectors’ growth and development.
Reflecting on the current fiscal year, Mbadi acknowledged the challenges posed by the withdrawal of the 2024 Finance Bill but assured stakeholders that the implementation of the FY 2024/25 budget is progressing satisfactorily.
The medium-term tax cuts are expected to boost purchasing power, enhance business profitability, and attract more investments, signaling a shift from President William Ruto’s previous stance of additional taxes to enhance revenue.
This new approach balances revenue generation with financial relief for citizens, with the government adopting a new financial management system focusing on transparency and accountability.
