Understanding the Public Revenue System in Kenya: An Overview of the Tax System

Benson Kiriga, Jacob Nato, Nathan Remcho and Magnus Eldrup

Working Papers from African Economic Research Consortium

Abstract: This paper provides a high-level analysis of Kenyas tax system, examining structures, performance, and potential reforms to enhance domestic revenue mobilization for economic development. Synthesizing data from national agencies, we identify the central challenges facing the tax systems in Kenya including compliance levels, a significant informal sector, and economic shocks. Our analysis underscores the need for data-driven policymaking, emphasizing Kenyas Medium-Term Revenue Strategy (MTRS) 2024-2027, aimed at reversing declining tax-to-Gross Domestic Product (GDP) ratios through a comprehensive modernization of the public revenue system. Our study further highlights major revenue streams such as income taxes and value added tax to show how a few taxes make up a large portion of domestic revenues and the urgency for optimization within these taxes. The stagnant or declining performance of many tax structures in Kenya reveal a need for comprehensive reviews and updates that enhance progressivity, encourage compliance, and raise revenues relative to GDP.

Date: 2025
New Economics Papers: this item is included in nep-acc
Note: African Economic Research Consortium
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