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Kenya: Tax exemptions hurt state revenue

Kenya has lost nearly $ 2.7 billion over the last three years, due to the government’s tax-free policy. This is according John Njiraini, Commissioner General of Kenya Revenue Authority (KRA).

According to the official, relayed by Bloomberg, between $840 and $890 million escape the coffers of the state every year.

This situation is attributable to the government’s policy of tax relief, which has seen the introduction of a VAT exemption for projects financed by international donors. This came as part of a reform strategy put in place to change the 2013 VAT Law, which significantly reduced the number of zero-rated and tax-exempt products.

We have to go back to the normal system, where all transactions go through the tax net and you have to adjust your expenses if you have certain social motivations

This statement came just days after the World Bank raised concerns about the country’s declining share of tax revenues relative to its gross domestic product (GDP). According to IMF estimates, this ratio, which reached more than 18% in 2014, fell to less than 16% this year.