Business owners across the country have urged the government to lower taxes and ease the cost of doing business.
In a Facebook post by Bizna Kenya to business owners on what policy changes the government could implement to help businesses succeed, the majority of the respondents pointed to high taxes as the single biggest obstacle facing businesses today.
The respondents argued that the current tax burden, coupled with compliance requirements, has made it increasingly difficult for businesses to expand with small and medium-sized enterprises bearing the biggest brunt.
“There are a lot of taxes, left right and centre and several types of licences which is a cost to business owners,” Chichir Ednah stated.
SMEs are widely regarded as the backbone of the Kenya’s economy, contributing significantly to employment creation and economic activity.
However, business owners say these enterprises are struggling to survive under the current tax regime arguing that lower taxes could stimulate business activity by freeing up capital that could otherwise be reinvested into operations, innovation, and job creation.
“Reduce taxes. Some businesses pay taxes to the county government, taxes to several national government agencies like NEMA, Department of Mining, KRA, etc. This multiple-level taxation is killing businesses adding to the problem of unemployment in the country,” Jimnah Kamau lamented.
The government has recently made several adjustments to the tax structure amid mounting public debt, rising inflation, and increasing pressure to raise revenue.
In the 2024–2025 financial year report, Controller of Budget (CoB) Margaret Nyakang’o said the pending bills increased by Sh9 billion in just 12 months.
The increase in pending bills has further strained businesses, particularly those supplying goods and services to the government. Delayed payments have left many firms struggling with cash flow challenges while still being required to meet tax obligations and operational expenses.
Moreover, the country has been trapped in a debt cycle with Sh7 out of every Sh10 collected going to debt repayment, which currently stands at Sh11.81 trillion.
The mounting debt vulnerabilities have caught the attention of the global lending arm, the World Bank, which recently recommended an excise duty increment for Kenya to clear existing pending bills.
In its Africa’s Pulse reports on economic growth in Sub-Saharan Africa, the World Bank urged Kenya to “remove distortions” that cripple economic growth to curb adverse demand impacts.
“Clear pending bills, finance their payment with higher consumption taxes,” read the report in part.
“Second, deploy a combination of fiscal, governance, and structural measures to deliver productivity-driven growth, quality jobs, equity, and increased fiscal space,” the statement added.
The government recently announced plans to simplify tax administration and improve the business environment.
Speaking before the National Assembly’s Departmental Committee on Finance and National Planning, Treasury Principal Secretary Chris Kiptoo said that the government is working closely with the Kenya Revenue Authority (KRA) to identify innovative ways of bringing more taxpayers into the formal tax system to improve collection.
Kiptoo said that the tax reduction plans will depend on the expansion of the tax base, adding that the government must first improve revenue collection coverage before cutting rates.
“We are very serious about reducing tax rates just as the CS said and as envisioned in our medium term revenue strategy and tax policy. We would like to reduce taxes; we want to see PAYE, VAT, and income tax come down. However, this will only be possible if we expand the tax base,” Kiptoo stated.
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