World Bank Criticizes Kenya’s Tax Plans

World Bank Criticizes Kenya’s Tax Plans. In its latest Kenya Economic Update, the World Bank warns that Kenya’s inability to generate the planned revenue impedes fiscal consolidation.

According to the financial institution, the Ruto government’s inability to generate enough funds is compounded by unrealistic revenue projections or overly optimistic revenue projections which can result in unrealistic spending plans.

World Bank Criticizes Kenya’s Tax Plans: On Revenue Projection So Far

It continued that, if revenue projections are incessantly missed, the government may end up spending more than it receives.

According to the Treasury, the fiscal output in the preceding nine months of FY2023/24 indicates the government’s relentless efforts to remain on a fiscal consolidation path.

Constant revenue increment driven by the execution of tax administration and policy measures in the Finance Act 2023 and the government’s efforts to contain growth in primary expenditures led to a rise in primary surplus.

Despite increased primary surplus and reduced primary expenditure, there is a need for feasible revenue projections if the goal is to achieve fiscal consolidation.

Revenue generation has always fallen short, hindering the credibility of the budget process. This can cause inexcusably large expenditure allocations and without enough funds can result in the amassing of pending bills.

Unexpected tax changes create uncertainty for businesses, making it hard to plan for the future and evaluate possible returns on investment (ROIs).

EABC, Stakeholders Call For Regional Tax Reconciliation

World Bank on Tax Shifts

Simultaneously, the World Bank says that recurring tax shifts by the government can indicate a lack of dedication to long-term economic stability, which deters foreign investors looking for dependable and predictable environments.

The bank stresses the need for a consistent tax environment, if businesses aim to make great investment decisions.

Unpredictable tax changes can impede business operations and directly impact the cost of doing business, particularly for import/export companies dealing with complex international tax regulations.

This unpredictability doesn’t only deter investors, it also affects tax compliance, which could result in lower government revenue.

All of these are at a time when Kenyans are preparing themselves for tax hikes as the Ruto government tries to cover its budget deficit.


The information contained herein is general and is not intended, and should not be taken, as legal, accounting or tax advice provided by Taxmobile.Online Inc to the reader. This information remains strictly the opinion of Taxmobile.Online Inc.The reader also is cautioned that this material may not apply to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of other tax factors if any action is to be contemplated.

The reader should contact his or her Tax Advisers before taking any action based on this information.All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Taxmobile.Online Inc.