- Government to Deploy Machine Learning for Tax Assessment by 2027
Kenya Eyes AI-Powered Tax . Kenya is preparing to usher in a new era of digital tax administration, with the government announcing plans to adopt algorithm-based tax collection over the next two years.
The initiative, spearheaded by Dr. David Ndii, Chair of the President’s Economic Council, aims to leverage artificial intelligence (AI) and machine learning (ML) to enhance efficiency, fairness, and compliance in tax administration.
Dr. Ndii made the announcement on Friday during the NCBA Economic Forum, emphasizing that Kenya’s digital transformation now makes it possible to integrate technology into the country’s revenue collection process.
AI to Widen Tax Net and Target Informal Sector
According to Dr. Ndii, the proposed system will allow the government to assess income more accurately, particularly among self-employed professionals and informal sector operators who have historically fallen outside the tax net.
“We are not planning to collect taxes the old way,” he said. “In a year or two, most of our taxes will be collected by algorithms, not people. This is made possible by AI and Kenya’s high level of digital finance penetration.”
The model, currently under development, will analyze financial data using AI tools to determine taxpayers’ earning potential, spending habits, and compliance levels. Officials project that the system could bring an estimated 2.5 million new taxpayers into the tax bracket once fully operational.
Lessons from the Hustler Fund and Health Premium Models
Dr. Ndii noted that the upcoming AI-based system builds upon existing machine learning models already used by the government—particularly in health insurance premium calculations and credit scoring for the Hustler Fund.
These earlier systems demonstrated how data analytics can enhance financial inclusion and policy implementation. The same approach, he explained, will now be applied to improve tax equity and compliance.
He further criticised the current structure of Kenya’s tax system, describing it as overly dependent on payroll-based taxation while ignoring high-income earners in the informal sector.
“We estimate there are professionals such as doctors in private practice and consultants earning like salaried workers but not contributing proportionately,” Dr. Ndii added.
See Also: Zambia’s 2026 Budget: New Tax and Business Reforms Strengthen Transparency and Compliance
Kenya Eyes AI-Powered Tax Collection: Balancing Innovation with Public Trust
While the proposal has been welcomed by some as a bold step toward modernising Kenya’s tax administration, analysts warn that its success will depend on data protection, algorithmic transparency, and public education.
Tax experts note that while AI-driven assessments could improve efficiency, they must be deployed within a framework that guarantees fairness and accountability—especially in determining taxable income without direct human review.
The Kenya Revenue Authority (KRA) is expected to collaborate with the Ministry of ICT and the National Treasury to ensure the system aligns with existing digital tax platforms, including the Electronic Tax Invoice Management System (eTIMS) and iTax.
Economic Outlook and Revenue Implications
The announcement comes as NCBA Bank revised its 2025 economic growth forecast to 5%, citing improved fiscal performance and investor confidence. However, the bank also warned that additional tax measures could trigger public resistance if not paired with visible service delivery improvements.
Economists believe the adoption of AI in tax collection could significantly raise Kenya’s tax-to-GDP ratio, which currently stands at around 13.5%, below the regional average.
If successfully implemented, the system could make Kenya one of the first countries in Africa to apply artificial intelligence for nationwide tax collection, potentially setting a benchmark for other emerging economies seeking digital-led fiscal reforms.
Toward Smarter Taxation
Kenya’s move toward algorithm-based taxation underscores the country’s broader fiscal reform agenda — one that aims to enhance compliance, promote fairness, and reduce human interference in revenue collection.
As Dr. Ndii put it, “Technology has given us the tools. It’s now about using them to build a tax system that reflects modern realities.”
