Treasury lowers tax target by Sh81bn after growth cut
The Kenyan National Treasury has lowered its tax revenue target by Sh81.4 billion for the 2026/27 financial year due to slower economic growth. The adjustment reflects weaker corporate and income tax collections amid global economic pressures and potential domestic weather risks.
Why it matters
Fiscal adjustments in emerging markets provide critical indicators for investors and policymakers regarding regional economic stability and growth prospects.
The National Treasury has cut its tax revenue target for the current financial year ending June by Sh81.4 billion, signaling weaker-than-expected collections from corporate and workers' earnings.
The Treasury expects the Kenya Revenue Authority (KRA) to net Sh2.777 trillion in taxes during the financial year 2026/27 from the Sh2.859 trillion target set in the Budget Policy Statement released earlier.
The estimates were adjusted after taking into account the fiscal outcome of the financial year 2025/26, the Treasury said in its newly published draft 2026 Budget Review and Outlook Paper.
The biggest blow to revenue is expected from income tax, with the Treasury having lowered expected collections by Sh78.6 billion, from Sh1.384 trillion to Sh1.305 trillion.
Read: Treasury posts wider Sh90bn revenue miss
This makes the income tax streams—largely corporate income tax on profits and Pay as You Earn on wages and salaries-- the largest contributor to overall revenue downgrade.
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