The Kenya private Sector Alliance (KEPSA) and the Kenya Revenue Authority (KRA) today convened high-level roundtable at the KRA Headquarters in Nairobi. The engagement, themed “Towards Competitive, Compliant and Predictable Tax Regime”, focus on practical solutions to strengthen tax administration, support business competitiveness, and protect revenue.
The event was co-chaired by the KRA Commissioner General, Mr Adan Mohamed and the KEPSA CEO Ms. Carole Kariuki and attended by the KEPSA Chairperson Dr. Jas Bedi, KEPSA Vice Chair Ms. Brenda Mbathi, KEPSA members drawn from manufacturing, trade, services and MSMEs and Mr. John Mwenda, CEO of Kenya Investment Authority (lnvestKenya).
KEPSA presented the Private Sector Tax Priority Matrix. On systems and integration, KEPSA CEO highlighted the persistent business disruption caused by iTax and eTIMS outages, and the lack of seamless data exchange between domestic taxes and customs systems. Ms. Kariuki noted that these challenges lead to ledger mismatches, delayed offsets, and higher compliance costs.
The KRA Commissioner General Mr. Mohamed acknowledged these frustrations. He confirmed that integration between eTIMS, iTax and iCMS is at an advanced stage, with the objective of enabling real-time, system-to- system validation to reduce human intervention and speed up processing. For customs, he explained that the architecture for iCMS, iSCAN and RECTS has been redesigned to isolate failures, so that a problem in one module no longer shuts down the entire port operations. He committed to continued investment in infrastructure, APi stability, and offline capability to ensure business continuity.
“KRAs approach is anchored around three pillars. First, technology, integration and automation must drive solutions to system instability, refund delays, customs clearance, and taxpayer verification. Second, expanding the tax base is more sustainable than increasing pressure on compliant taxpayers. Third, structured and continuous partnership with KEPSA through technical teams and sector working groups is essential for delivery,” emphasized Mohamed.
Cashflow and VAT refunds dominated the discussions, with KEPSA highlighting that refund delays, together with the Ksh40 million monthly payment cap, are placing severe strain on working capital for exporters and manufacturers, and are undermining Kenya’s export competitiveness. The Commissioner General acknowledged the impact on business liquidity. He noted that in FY2025/26, KRA paid approxim ately Ksh 5 billion monthly in refunds, with Green Channel claims averaging 49 days and standard claims about 60 days under a largely First-ln, First-Out (FIFO) model. He explained that the Ksh40 million cap is driven by Treasury funding allocations, not by KRA policy. He committed to sustained engagement with the National Treasury to secure higher allocations, and to accelerate automation through eTIMS and iCMS integration to shorten verification times. While no immediate commitment was made to lift the cap, he recognized it as a binding constraint.
On Legacy Section 42 Credits 2013-2 2018, KEPSA that noted that migration gaps from manual to iTax have left unresolved balances, with taxpayers continuing to receive agency notices despite available credits. The Commissioner General acknowledged this historical challenge and committed KRA to three actions: direct engagement with affected taxpayers, a technical reconciliation exercise, and support for resolution within the ongoing tax amnesty window.
There was strong alignment on tax policy predictability. The Commissioner General stated that any new tax law will be applied prospectively and not retrospectively, and that businesses must be given reasonable transition periods. KEPSA welcomed this commitment as critical for investment planning and business confidence. In support of the commitment, Investkenya CEO Mr. John Mwenda noted that ” investors closely watch policy consistency, system reliability, and the ease of doing business, and that close collaboration between KRA and the private sector is key to positioning Kenya competitively in the region.
On Alternative Dispute Resolution, KEPSA flagged delays caused by capacity constraints and incomplete documentation. The Commissioner General recognized these challenges, and was receptive to KEPSA’s proposal for risk-based categorization so that simple disputes are resolved faster, and to exploring the use of accredited external mediators. He directed relevant Commissioners to work with KEPSA to develop a revised ADR framework with clear timelines. On Transfer Pricing, the Commissioner General agreed that most disputes arise from interpretation and documentation quality. He committed to issuing clearer practice notes where rules are ambiguous and confirmed that there will be no retrospective application of new KRA positions.
Base expansion and competitiveness emerged as the strongest area of convergence. The Commissioner General stated that “Kenya has a tax base problem, not a tax rate problem.” He noted that the formal sector is carrying a disproportionate burden due to leakage from informal trade, under-declaration, valuation fraud, and poor VAT compliance. He committed to a dual approach: stronger enforcement using data analytics and third-party data matching, and deliberate expansion of the tax net through education and partnerships. He welcomed KEPSA’s offer to co-deliver taxpayer education, sector outreach, and intermediary training for MSMEs to ensure formalization is gradual and supportive.
Under international tax, KEPSA raised the need to gazette outstanding MTTR and APA regulations to provide certainty to investors. The Commissioner General acknowledged the urgency and committed to fast-track publication. On DTAs, he explained the complexity involving Treasury, Foreign Affairs, the Attorney General and Parliament. He committed to continue negotiations and to consider KEPSA’s proposals for a more structured DTA policy, while ensuring Kenya’s interests as a capital-importing country are protected.
KEPSA also raised concerns about inconsistent valuation, scanner downtime, and RECTS reliability at border points. The Commissioner General recognized the impact on trade competitiveness. He committed to sector-level technical discussions, evidence-based policy reviews, and coordination through EAC structures.
On Withholding VAT, KEPSA highlighted the cashflow burden on suppliers, which the Commissioner General acknowledged and agreed to review administrative reliefs and exemption thresholds in technical sessions On Excise and Digital Services Tax,
KEPSA noted inconsistencies in application. The Commissioner General committed to issuing practice notes to harmonize administration. On the Tax Amnesty, KEPSA requested wider publicity and clarity on post-window enforcement. The Commissioner General agreed to intensify awareness and confirmed that enforcement will be fair and targeted.
A key strategic discussion covered EAC trade competitiveness, including CET and Stay of Application measures. The Commissioner General agreed that Kenya faces structural cost challenges and that some protection measures are not delivering intended outcomes. It was agreed that KEPSA will prepare and submit evidence-based analysis on CET distortions and Stay of Application impacts for joint engagement at the EAC level.
The roundtable demonstrated strong convergence between KRA, KEPSA and InvestKenya on systems, predictability, base expansion and competitiveness. To translate this goodwilinto measurable impact, KEPSA requested the KRA Commissioner General’s leadership in engaging Treasury on VAT refunds; fast-tracking the gazettemnent of MTTR and APA regulations; approval of dedicated taskforce with a 90-day timeline to close Section 42 balances; and a directive to Commissioners to convene technical working groups with KEPSA within 30 days.
Ms Kariuki appreciated the Mr. Mohameď’s openness and reaffrmed KEPSA’s commitment to continue partnering With KRA in driving compliance, expanding the tax base, and enhancing Kenya’s competitiveness.
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