The World Bank has commended Kenya’s effort to expand its tax net, reiterating that the measures are a step further in the country’s quest to widen its tax base.
The multilateral body also said the new revenue drive would bolster domestic revenue mobilisation when raising financing from external sources proved challenging.
The World Bank says by 2024, 0.7 percent of GDP and $665.25 million more tax revenue could be generated thanks to the implementation of Value Added Tax (VAT) on digital suppliers and the introduction of a withholding tax on financial derivative gains by non-residents, among other measures.
“The government issued new VAT regulations on supplies through the digital marketplace (Electronic, Internet Digital Marketplace Supply) by providing the interpretation, scope, simplified registration framework, appointment of tax representatives, place and time of supply, accounting for and payment of tax, claim for input tax and penalties,” the World Bank states.
“The government has also issued EGMS regulations to amend the provisions concerning excise stamps on excisable goods, exemption from excise stamps, and disposal of forfeited and seized goods. To streamline implementation, excisable goods required to have excise stamps are now listed in the first schedule of the EGMS regulations.
The amendments will promote fair administrative justice by introducing a new provision for a notification to the owners of seized or forfeited goods before disposal, as well as widen the provision on the application for licence or registration and the minimum specifications for metering, measurement, and monitoring devices,” the bank says.
With a national debt of 65 billion dollars, or 67% of GDP, Kenya is facing some financial difficulties, and the cost of repayment is growing as the value of the Kenyan shilling drops.
Despite its financial stress, however, the World Bank said the recent progress in the agricultural sector would likely lead to Kenya’s economic growth at a slightly faster pace than last year. The international lender, in its latest biannual Kenya Economic Update report, said the economy would expand by 5.0% in 2023, inching up from 4.8% last year.