KEPSA participated in a virtual meeting on 17^th April 2024 hosted by the International Monetary (IMF) to discuss the implementation of the first-ever medium-term Revenue strategy (MTRS) in Kenya. The strategy aims to augment the National tax policy, the two documents will form the basis for the formulation of the annual Finance Acts over the medium term.

The revenue strategy paper mirrors the medium-term expenditure framework (MTEF), by creating predictable revenue targets, through setting out strategies and plans to aid in achieving the set-out targets over the medium term to help the government execute its mandates.

The IMF mission has a mandate to develop the implementation strategy for the MTRS, to enable Kenya to achieve the targeted revenues over the medium term considering the dwindling aid and loans from Kenya’s conventional financiers.

The private sector emphasized the role it plays in the economy and advocated for more involvement in the policy space right from inception to implementation stage for purposes of achieving the intended purposes. The Chair of KEPSA Public Finance Sector Board, CPA Rose Mwaura, in her remark, emphasized the great need to enhance visibility of the private sector in revenue collection and expenditure space. She underscored that lack of incorporation of the private sector not only creates systematic bugs but also great challenges in actualizing the National Agenda.

Further, Ms. Mwaura appreciated the technological advancements made by the KRA to ease and enhance revenue collection. It is prudent that the technological change be implemented in a phased approach to enhance compliance and familiarity with the taxpayers before full roll-out.  Full system roll-out coupled with short and strict timelines have proved to be challenging to taxpayers hence conflict between the Tax administration and business communities an example of E-TIMS and VAT auto-population was floated.

Imposing tax on finished products in some of the sectors was noted to be an impediment towards the growth and competitiveness of the sector. It was noted that 59% of the alcohol in the market was being sold in the illicit market, leaving only 41% being traded in the formal market. This example illustrates that Excise Tax imposed on raw products rather than finished goods of production is an impediment to business operating formally.

In conclusion, it was noted that the IMF would engage with the National Treasury to streamline the National policy aspirations in the Finance Acts to have taxation of raw unattractive. This being an example of the conflict between the tax policy and the finance Acts. The same formed a basis for the IMF to engage further with The National Treasury and KRA on implementation of the strategy taking into consideration the asks of the private sector.