PKF Weighs in on Proposed 2025/26 Tax Measures, Urges Balanced Reforms for Sustainable Growth
Alpesh Vadher,PKF Chief Executive Officer Speaking during a pre- Budget Media Briefing offering insights on the economy,Finance Bill 2025 and the expectations for the 2025/2026 Budget.
PKF Kenya has expressed cautious support for the government’s ambitious tax expansion and reform agenda outlined in the 2025/26 Budget, but warns of significant risks if not carefully implemented.
In a comprehensive position statement, the audit and advisory firm acknowledged the government’s recent success in broadening the tax base. The Tax Base Expansion Strategy added 1.2 million new taxpayers and raised KES 24.6 billion in the 2023/24 financial year. President William Ruto also announced that 8 million tax returns were filed by June 2024, signaling improved compliance.
Despite this progress, PKF cautioned that Kenya’s tax compliance levels remain low relative to its population of 47 million. The firm urged continued focus on expanding the tax base, particularly through sectors like real estate, digital commerce, and the informal economy. Measures such as the enhanced Electronic Tax Invoice Management System (E-TIMS), digital asset taxation, and the rollout of the iWhistle platform are expected to support this goal.
However, PKF raised concerns over the government’s plan to reduce tax expenditure, which it says could negatively impact investment. The firm pointed out that tax incentives have historically played a key role in growing sectors like manufacturing, agriculture, and tourism.
“The proposed repeal of incentives for Special Economic Zones, local vehicle assembly, and residential housing development could stifle economic activity,” Vadher noted, adding that limiting the carry-forward of tax losses to five years would hinder capital-intensive investments and disrupt cash flow planning for businesses.
PKF also flagged serious privacy concerns around a proposal in the Finance Bill 2025 to give the Kenya Revenue Authority (KRA) broader access to personal and commercial data. It warned this could infringe on constitutional rights and undermine public trust, especially in the absence of a clear data protection framework.
At the same time, PKF criticized the unpredictability of Kenya’s tax regime. While it welcomed the publication of the National Tax Policy and the Medium-Term Revenue Strategy in 2023, it said the benefits remain largely unrealized. The firm called for more consistent implementation to reduce uncertainty and support long-term economic planning.
“Tax reforms must strike a balance between revenue generation, economic stimulus, and constitutional safeguards,”he stated, emphasizing the need for inclusive, transparent, and predictable fiscal policy.
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