The government has ruled out introducing new taxes in the upcoming Finance Bill for the 2026/2027 financial year, signaling a major strategic shift in how it plans to generate revenue.
Treasury Cabinet Secretary John Mbadi shared this update on Thursday, March 26, while appearing before the National Assembly’s Budget and Appropriations Committee to discuss the 2025/2026 Supplementary Estimates. He explained that the state will now focus its energy on improving the efficiency of existing tax collection methods rather than adding to the tax burden.
Mbadi noted that the Ministry is placing increased pressure on the Kenya Revenue Authority (KRA) to strengthen compliance and plug revenue leakages across key sectors of the economy. The Treasury expects the taxman to move away from aggressive expansion and toward more precise enforcement of current laws.
Specifically, the Cabinet Secretary identified rental income as a primary area where the KRA has consistently under-collected. To address this gap, the government plans to deploy targeted enforcement and advanced tracking systems to ensure landlords contribute their fair share to the national basket.
The Cabinet Secretary noted that digitizing tax processes remains the core strategy for widening the tax base. This approach aims to ensure more Kenyans and businesses meet their obligations without the government needing to introduce new levies.
“We will not be increasing revenue in the coming Finance Bill. That is why we are putting pressure on KRA to collect more revenues, and we are looking at the possibility of progressing with much-talked-about tax base expansion,” Mbadi affirmed.
Mbadi admitted that, despite significant public discussion, the tax base has not expanded as quickly as the government previously anticipated. To rectify this, the Treasury is pushing for deep institutional reforms at the Kenya Revenue Authority (KRA), specifically focusing on modernizing its digital infrastructure.
“The base has not expanded as we had expected despite the much hype. That is why we are putting pressure on the KRA and undertaking institutional reforms which also extend to digitisation,” he added.
Furthermore, the Cabinet Secretary indicated that the government might implement even more rigorous institutional changes at the KRA if revenue targets continue to fall short. He highlighted a growing technological gap, noting that many taxpayers currently possess more advanced digital capabilities than the tax authority’s own aging systems.
Meanwhile, the taxman has intensified its scrutiny of mobile money transactions in a new crackdown targeting taxpayers who file nil returns despite maintaining active financial profiles. Maurice Oray, the Deputy Commissioner for the Policy and Tax Division, announced on March 25 that the authority is expanding its monitoring across all income streams. This move follows the discovery of significant inconsistencies between reported earnings and actual financial activity among some taxpayers.
Under this revamped approach, the KRA will rely more heavily on real-time financial data, including mobile money records, to verify income.
The authority also plans to introduce pre-filled tax returns, where the system automatically captures known income streams before the taxpayer even begins the filing process. This automated strategy aims to eliminate the “nil return” loophole used by those attempting to bypass their tax obligations.
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