2023 Budget Policy Statement
The National Treasury and Economic Planning released the Draft 2023 Budget policy statement (BPS) on 18th January 2023. The policy statement prepared under the new Administration-the Kenya Kwanza Government, sets out the Administration’s priority programs, policies and reform goals to guide the National Government and the County Governments in preparing their budgets for the subsequent financial year and over the medium term. The agenda of the policy is geared towards economic recovery and inclusive growth.
As part of the economic turnaround plan, the Government will scale up revenue collection efforts by Kenya Revenue Authority (KRA) to Ksh 3.0 trillion in the FY 2023/24 and Ksh 4.0 trillion over the medium term. KRA will implement various tax administrative and policy reforms including:
- Reduction of Value Added Tax (VAT) gap from 38.9 percent to 19.8 percent of the potential by fully rolling out electronic Tax Invoice Management System (eTIMS);
- Reduction of Corporate Income Tax (CIT) gap from 32.2 percent to 30.0 percent of the potential as envisaged in the KRA Corporate Plan;
- Integration of KRA tax system with the Telecommunication companies (Telcos);
- Tax base expansion in the informal sector;
- Implementation of rental income tax measures by mapping rental properties; and
- Roll out of measures at the Customs and Border Control leveraging on technology and enhanced data analytics to enhance revenue per unit.
This will increase the tax collected by KRA with VAT projected to rise to Ksh 1.06 trillion by the end of June,2027 compared to the target of Ksh 587.7 billion in the current fiscal year and Micro, Small and Medium Enterprises (MSMEs) expected to raise Kshs 2.8 trillion.