Kenya’s wealthy households and companies have lost 145.39 billion Shillings ($1.2 billion) in tax benefits after the taxman reduced incentives in the five years to 2021, Business Daily reported, citing treasury data.

Tax benefits dropped to 259.51 billion Shillings last year from 404.90 billion Shillings in 2017, according to the 2022 annual report on tax expenditures by the Treasury.

The Treasury and the Kenya Revenue Authority (KRA) have been withdrawing some of the preferential tax rates, investment deductions, zero-rating for value-added tax (VAT) and exemptions as part of the structural benchmarks with the International Monetary Fund (IMF).

“The government will continue to upscale efforts to rationalise and harmonise the tax expenditures with the aim of removing redundant tax expenditures and enhancing those intended to promote investments,” the Treasury stated.

The data showed tax concessions on domestic value-added tax (VAT) — paid by merchants with annual sales of more than 5 million Shillings — declined to 211.94 billion Shillings in 2021 from 234.38 billion Shillings in 2020.  

The report said that the preferential corporate income tax given to businesses, trusts and co-operatives fell by 75.6% to 5.86 billion Shillings last year from 23.96 billion Shillings in 2020.

(Editing by Seban Scaria seban.scaria@lseg.com )