Kenya’s Tax Uncertainty Is Becoming an Investment Cost.

In Chinua Achebe’s Things Fall Apart, Eneke is the bird that learns to fly without perching after men learn to shoot without missing. It is a clever answer to danger. It is a poor way to build a nest.

We, Kenya’s founders, know the difference. A short lease is safer than a long one when next year’s costs are unknown. Cash in the bank is safer than a new data centre. Hiring can wait until we know what our products will cost to sell. Each decision protects the firm. Together, they leave Kenya with fewer companies, fewer jobs and less taxable income than it could have had.

Let me go back to the beginning. This year marks 250 years since Adam Smith published The Wealth of Nations. In its fifth book, he set four tests for any tax. It should be fair in its burden, certain in its amount and timing, convenient to pay and economical to collect. Smith ranked certainty first. An uncertain tax, he warned, hands the collector discretion over what the taxpayer cannot know in advance, and discretion invites insolence and corruption.

How does Kenya fare against the old Scot?

In September, the World Bank published its Country Private Sector Diagnostic for Kenya. Of the firms surveyed, 64% called tax rates a major or very severe constraint, and 38.6% said the same of tax administration. Our corporate income tax rate, the Bank notes, is broadly in line with regional peers. The trouble lies elsewhere: multiple national and county levies, frequent changes, cumbersome administration and perceptions of unequal treatment. Kenya adopted a National Tax Policy in 2023 to make tax predictable. It is not binding. So every June, the Finance Bill rewrites the rules one item at a time, and every June the country argues about it. The argument has become a ritual, and the frustration no longer waits for June. On 28 August, small traders shut their shops and marched to Parliament after KRA raised the minimum customs value of a consolidated 40-foot container from KSh 2.5 million to KSh 3.2 million. They were met with tear gas.

When the price changes after the contract

Our own industry learned the lesson this year. Under the Finance Act 2026, fees that payment service providers charge for processing, settlement, merchant acquiring, gateways and aggregation now carry 16% VAT. Card interchange and merchant service fees are now professional fees for withholding tax. Fees for access to payment networks are now royalties. Virtual asset service providers pay a 10% excise duty on their fees. MPs struck out VAT on mobile money transfer fees before passing the Bill. Most of the rest took effect on 1 July.

These are charges on the machinery that moves money between a customer and a merchant. Each provider must now work out which fees to tax, which payments need withholding and what its contracts allow it to recover. A tariff agreed with a merchant in March may have to be reopened in July. If we absorb the cost, it comes out of our margins. If we pass it on, the merchant raises prices or asks the customer to pay some other way, perhaps in cash. Which of these did the Government intend? Did anyone measure it before the vote? Will anyone measure it after?

No spreadsheet can settle a tax question that Parliament has yet to answer. We can price a known rate. We cannot price a rate that may change in June.

The State collects time as well as money

The tax burden also sits in a firm’s diary. Withholding tax and withheld VAT must be remitted within five working days of each payment. For a business that pays suppliers every day, that is a filing cycle without end. From next year, individuals must also file their returns by 30 April instead of 30 June.

Then there is eTIMS. Most business expenses must now be backed by an eTIMS invoice to count against tax, and many suppliers still do not issue one. KRA eased the upload rules for non-eTIMS expenses in May, and it is linking eTIMS to M-Pesa on the seller’s side. Yet the burden of proof still falls on the buyer, who cannot make a supplier comply. Pharaoh, too, demanded bricks without straw.

Refunds take time of a different kind. The World Bank describes mango processors who import machinery at zero duty but pay 16% VAT at the border. Their fruit is exported at zero VAT, so they claim the tax back. The wait, the Bank says, often runs from 12 to 24 months. Our industry knows the same queue. Since July 2023, exported services have been zero-rated, so a Kenyan firm that sells software or payment services abroad can sit in a permanent refund position too. In May, MPs on the Finance Committee raised the alarm over a VAT refund backlog put at KSh 50 billion. Money held in that queue cannot pay engineers or fund the next market. The tax is recoverable in law and expensive in practice.

Read the budget, not only the Finance Bill

KRA collected a record KSh 2.844 trillion in taxes and agency revenues in 2025/26, up 10.6%. Domestic revenue still reached only 93% of its target. The pressure behind every new tax measure is on the other side of the ledger. The 2026/27 budget plans KSh 4.8 trillion in spending against ordinary revenue of KSh 2.95 trillion, leaving a deficit of KSh 1.15 trillion. The Controller of Budget reports that in the first nine months of 2025/26, KSh 1.35 trillion of the KSh 3.21 trillion the Government received went to debt service. More than four of every ten shillings.

The Finance Bill is the invoice. The budget is the order. Kenyans have learned to fight the invoice every June while the order goes through.

Government borrowing also competes with us for capital. Credit to the private sector fell from 36.7% of GDP in 2015 to 29.1% in 2024, and private investment, at about 13% of GDP, sits where it stood two decades ago. We are not asking for tax cuts paid for with more borrowing. That bill would come back to us as dearer credit. We are asking for a system we can plan around, and a State that keeps its own promises. The PAYE relief that salaried Kenyans were told to expect in the Finance Bill 2026 was moved to September, then to public participation in October. It is still not law.

What we ask the Government to do

We pay tax and we will keep paying it. Kenya’s fintech industry built many of the rails on which this country’s taxes are now paid. We ask the National Treasury, KRA, the Central Bank, Parliament and the counties to act on seven things before the Finance Bill 2027 is drafted.

1. End the annual rewrite. The National Treasury should publish a rolling three-year tax roadmap of proposed changes to rates and bases. Significant measures should carry a published assessment of revenue, business effects and overlap with county charges, and take effect no sooner than six months after assent, unless Parliament declares an emergency and explains why.
2. Review the payment taxes with us. The Treasury, the Central Bank and KRA should review the payment provisions of the Finance Act 2026 with providers and merchants within six months, and publish what they raised, what they cost to administer and whether merchant charges or the use of cash changed.
3. Pay refunds on time. Write a 90-day payment deadline for verified VAT refunds into law, with interest paid automatically after it. KRA should publish the number and age of outstanding claims every quarter. Introduce VAT deferment at the border for imported capital equipment, which the World Bank recommends for processing machinery, so that exporters do not finance the State out of working capital.
4. Let the rails carry the receipt. KRA should let any business that pays a till number, paybill or bank merchant opt in to have the payment recorded in eTIMS as an expense, tagged by purpose, across every licensed payment provider and bank. Until that works at scale, genuine expenses should not be disallowed because a supplier failed to issue an invoice.
5. Tax small firms on what they can count. Raise the turnover tax ceiling from KSh 25 million to KSh 50 million, with rates set by sector from industry margins, and let firms that keep full accounts opt out. The Treasury floated this logic itself this year with a deemed-profit tax on mitumba imports. Use the prepopulated returns allowed under the Finance Act 2026 so that a taxpayer who has declared and paid confirms a return instead of rebuilding one.
6. Give us one calendar. Move withholding tax and withheld VAT to the 20th of the following month, the day VAT itself is due. Counties should implement the County Licensing (Uniform Procedures) Act 2024 in full and publish every permit and charge, so that a firm knows its obligations before an officer arrives.
7. Open the start-up rate. The Finance Act 2025 gave start-ups certified by the Nairobi International Financial Centre a 15% corporate tax rate for three years, rising to 20%. Extend it to every certified Kenyan start-up.

Usipoziba ufa, utajenga ukuta, the Swahili say. Which is to say, if you do not seal the crack, you will build a wall. The cracks are known. The World Bank has mapped them. Parliament has heard them. The traders have marched over them.

Eneke could survive by staying in flight. A founder cannot build an enduring employer that way. Machines, people and customers need commitments that outlast a Finance Bill. Kenya cannot order firms onto a branch that keeps moving. It can publish the rules, give us time to adjust and keep its own deadlines when money is owed back. Do that, and we will perch, sign the leases and hire the graduates. Keep shooting, and Kigali, Kampala and Dar es Salaam are a short flight away.