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Kenya Loses Ksh500 Billion Annually Through Tax Concessions – Treasury

Ukur-Yattani
National Treasury CS Ukur Yatani. [Courtesy]

Kenya loses over of Ksh500 billion annually through tax concessions or preferences (tax expenditure), Treasury CS Ukur Yattani has said.

Speaking during the 6th tax summit organised by Kenya Revenue Authority (KRA) in Nairobi on Wednesday, Yattani revealed that the concessions and preferences amounted to Ksh535.9 billion in 2018, a six per cent of gross domestic product (GDP).

Value Added Tax (VAT) accounted for 69.2 per cent followed by corporate income tax at 15.7 per cent while customs exemptions and remissions accounted for 13.9 per cent.

“We are considering a review of tax expenditures and incentives to minimise such revenue loss,” Yatani said.

Read: Why KRA Will Continue Collecting Taxes Using Nullified Laws

Tax expenditures are offered to some investors to reduce the tax burden, attract investments, and encourage economic growth.

Among the incentives offered include preferential rates of tax, enhanced investment deductions, tax reliefs, zero rating for VAT purposes, remission of taxes and exemptions.

In a bid to cushion Kenyans from the effects of Covid-19, the taxman has already foregone Ksh172 billion.

In March, the President offered relief to persons earning Ksh24,000 and below, reduced corporate and personal income tax rate from 30 per cent to 25 per cent, reduced the VAT rate from 16 per cent to 14 per cent and reduced turnover tax rate from three per cent to one per cent.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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