KEWOPA and the Institute of Public Finance (IPF) have raised concerns over Kenya’s unpredictable tax framework, warning that frequent policy changes are undermining investor confidence and long-term business planning.
In a joint submission to the Departmental Committee on Finance and National Planning on the Finance Bill 2026, the organisations said tax predictability, certainty, and stability are essential for a fair and investment-friendly system.
Policy Instability Raising Economic Concerns
KEWOPA and IPF said Kenya’s fiscal environment is now defined by frequent amendments and reversals of tax measures, often shortly after enactment.
They noted that the Finance Bill 2026 is the fourth under the current administration, yet core concerns around consistency remain unresolved.
The organisations stressed that global best practice shows stable tax systems drive growth and investment more effectively than repeated introduction of incentives and short-term fiscal adjustments.
Reversals and Sector Uncertainty Highlighted
The two institutions cited the proposed extension of bad debt relief from two to three years, reversing a 2025 reform, as well as the reinstatement of weekends and public holidays in tax objection timelines, reversing earlier exclusions.
They also flagged repeated VAT adjustments affecting electric mobility and clean cooking technologies, warning that such shifts undermine green investment and climate commitments.
In addition, they pointed to inconsistent implementation of the Medium-Term Revenue Strategy and National Tax Policy as a continuing source of policy incoherence.
LSK Flags Legal and Drafting Concerns
In a separate submission, the Law Society of Kenya (LSK) said while parts of the Finance Bill 2026 modernize tax administration, several provisions raise concerns on taxpayer rights, legal certainty, and competitiveness.
It cited a pattern of previously rejected proposals being reintroduced, including changes to appeal timelines and expansion of agency notice powers, saying this undermines legislative integrity and public trust. LSK also flagged drafting gaps and weak regulatory backing that could hinder implementation.
It criticised proposals requiring mandatory cash distributions regardless of liquidity, but welcomed measures removing double taxation on trust income, reducing the road maintenance levy, and abolishing excise duty on bottled water.
KEWOPA and IPF urged alignment with the Medium-Term Revenue Strategy and National Tax Policy, calling for consistent application of long-term frameworks.
They said this would strengthen compliance, boost investor confidence, and support growth, recommending a more predictable and transparent tax regime.
