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Nairobi, Kenya – Kenya lost over Sh500 billion in 2023 due to tax waivers, corruption, and illicit financial flows, according to a new report by the National Taxpayers Association (NTA). Experts warn that urgent reforms are needed to protect both national and county revenue.
The report shows that tax waivers and exemptions surged by Sh106.4 billion, from Sh393.6 billion in 2022 to more than Sh500 billion in 2023. This loss equals roughly 3.3% of Kenya’s GDP in a single year.
Bribery, Corruption, and Illicit Financial Flows
The NTA report highlights that bribery, corruption, and theft by government officials are key drivers of Illicit Financial Flows (IFFs). Tax incentives designed to attract foreign investment often fail because they are granted without proper oversight.
Lawyer Denis Moroga, who presented the findings, explained that Kenya loses substantial revenue through tax evasion, aggressive avoidance, and abusive transfer pricing, where companies shift profits to low-tax jurisdictions. Other major issues include trade mis-invoicing, poorly assessed tax incentives, and money laundering by organized crime.
Calls for Urgent Reforms
Outgoing NTA CEO Irene Otieno emphasized that Kenya is missing out on critical income due to weak enforcement and poor tax policies. She urged the Senate and Council of Governors to collaborate with the national government to close tax loopholes and recover lost revenue.
“Recovered revenue could fund better public services, including roads, health clinics, and clean water projects,” Otieno said.
The report, titled Concept of Illicit Financial Flows and Domestic Revenue Mobilisation in Kenya, is based on legal studies, government data, and interviews with civil society organizations. Despite Kenya having strong tax and anti-corruption laws, loopholes continue to allow billions of shillings to exit the country annually.
Read more on Kenya’s economic challenges and government reforms at metros.co.ke/.
