President William Ruto has drawn attention to a glaring disparity in tax contributions from Micro, Small and Medium Enterprises (MSMEs), emphasizing the urgent need to align their remittances with their economic impact and expand the national tax base.
During Wednesday evening’s Taxpayers’ Dinner at State House, Nairobi, President Ruto revealed that MSMEs contribute 33% of Kenya’s GDP and employ nearly 15 million people, representing 86% of the national workforce, yet they account for merely 1% of tax revenue.
He stressed that tax remittances fuel nation-building and should transcend legal obligations to become “an act of patriotism and solidarity” for national development.
“It is a collective effort that calls for participation, contribution, and shared responsibility,“ he said.
To bridge the gap, President Ruto announced that the Kenya Revenue Authority has set up a new Micro & Small Taxpayers Department dedicated to serving individuals and MSMEs. The department will work with the 1.2 million MSMEs currently registered in the tax system and plans to onboard over 5 million additional small businesses by offering simplified procedures, tailored support and easier access to tax services.
“While 3 million Kenyans in formal employment contribute Ksh.600 billion in taxes annually, the remaining 17 million registered taxpayers contribute only Ksh.17 billion,” Ruto noted.
KRA has simultaneously launched an electronic rental income tax system designed to collect Ksh.80 billion annually, significantly up from the current Ksh.14 billion.
The President asserted that Kenya can accelerate development through improved tax compliance.
KRA reports it has surpassed Ksh.2.57 trillion in tax collections and targets the Ksh.3 trillion milestone this financial year.
