Government announces plans to lower VAT and other taxes
Treasury CS John Mbadi announces government plans to lower taxes in order to cushion Kenyans
Treasury CS John Mbadi announces government plans to lower taxes in order to cushion Kenyans.
Treasury Cabinet Secretary John Mbadi has revealed the government’s plan to reduce taxes over the next three years, in a bid to ease the financial burden on Kenyans.
Speaking at the launch of the Financial Year 2025/26 Budget Preparation Process on Monday, Mbadi announced that the Value Added Tax (VAT) will be reduced from 16% to 14% while corporate tax will drop from 30% to 25%.
The move is part of a broader strategy to foster economic resilience, particularly in key sectors such as agriculture, manufacturing, and housing.
Mbadi emphasised that while the government will not support any additional expenditures in the medium term, it will instead focus on improving efficiency, accountability, and the prudent use of resources.
“The government is committed to fiscal discipline. We aim to enhance transparency in our financial management systems and in procurement processes,” Mbadi stated.
“Despite the fiscal constraints we are facing, we will ensure growth, expand opportunities, and prioritize sectors critical for economic recovery.”
Agriculture, he added, would remain at the heart of the government’s strategy to drive manufacturing and economic growth, with a specific focus on supporting small and medium enterprises (SMEs) and affordable housing projects.
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These sectors are set to receive special attention in the Fourth Medium Term Plan, which also outlines initiatives to transform the MSME economy, healthcare, housing and settlement, and the development of the digital superhighway.
Reflecting on the ongoing fiscal year, Mbadi noted that the implementation of the FY 2024/25 budget is progressing, despite the challenges presented by the recent withdrawal of the 2024 Finance Bill.
“With the Finance Bill no longer on the table, the government has had to forego additional revenue measures. Therefore, we have taken steps to realign our priorities with the resources at hand,” he explained.
The medium-term tax cuts are expected to boost household purchasing power and enhance business profitability, offering much-needed relief to both citizens and the private sector.
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