In a significant policy announcement, Treasury Cabinet Secretary John Mbadi has revealed the government’s strategy to implement medium-term tax cuts aimed at relieving financial pressures on Kenyans.

Speaking at the start of the Financial Year 2025/26 Budget Preparation Process, Mbadi confirmed that the Value Added Tax (VAT) will decrease from 16% to 14%, and corporate tax rates will be lowered from 30% to 25%.

“These reductions reflect our commitment to fostering economic resilience, especially in vital sectors such as agriculture, manufacturing, and housing,” Mbadi stated. He further emphasized that the government will prioritize fiscal discipline without resorting to additional expenditures, indicating a concerted effort to enhance efficiency and accountability in resource management.

“The government is committed to fiscal discipline. We aim to enhance transparency in our financial management systems and procurement processes,” he added, reinforcing the call for improved governance during these challenging economic times.

Mbadi highlighted the critical role of agriculture in driving economic growth and reaffirmed support for small and medium enterprises (SMEs) and affordable housing projects. With the withdrawal of the 2024 Finance Bill, the government plans to realign its priorities to maximize the available resources.

These medium-term tax reductions are expected to significantly boost household purchasing power and increase business profitability, offering a much-needed boost to both citizens and the private sector as Kenya navigates its economic recovery.