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

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  • Kiriga, Benson
  • Nato, Jacob
  • Remcho, Nathan
  • Eldrup, Magnus

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.

Suggested Citation

  • Kiriga, Benson & Nato, Jacob & Remcho, Nathan & Eldrup, Magnus, 2025. "Understanding the Public Revenue System in Kenya: An Overview of the Tax System," Working Papers 8051fe3a-63ff-4af7-962c-c, African Economic Research Consortium.
    • Handle: RePEc:aer:wpaper:8051fe3a-63ff-4af7-962c-c592c90ac33b
    Note: African Economic Research Consortium
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