Deloitte East Africa Tax and Legal Partner Fred Omondi has urged the government to establish a permanent tax amnesty programme, warning that the current tax enforcement model could undermine voluntary compliance while leaving billions of shillings tied up in disputed and potentially unrecoverable tax liabilities.
His proposal comes as the government intensifies efforts to enhance tax collection and compliance in pursuit of its ambitious revenue goals under the 2026/27 financial year budget.
Omondi noted that Kenya’s tax regime is highly complex, often leading taxpayers to accumulate liabilities due to differing interpretations of tax laws, administrative mistakes, or shifts in tax positions rather than deliberate tax evasion.
Although official records place outstanding tax arrears in the trillions of shillings, he argued that a substantial portion comprises penalties, accrued interest, accounting discrepancies, and unresolved disputes.
Speaking at a post-budget analysis forum attended by Expertise Global Managing Director and fiscal policy economist Wangari Kebuchi, Visible Industries CEO Anthony Mwangi, and Equity Group Holdings Company Secretary and Head of Tax Lydia Ndirangu, Omondi proposed replacing periodic tax amnesties with a permanent voluntary disclosure mechanism. Such a framework, he said, would allow taxpayers to regularise their tax affairs before audits or enforcement measures are initiated.
According to Omondi, the essence of an amnesty programme is to encourage taxpayers to voluntarily disclose errors or omissions before they are detected by authorities.
He observed that taxpayers frequently make genuine mistakes or receive alternative professional advice that alters their interpretation of tax obligations, arguing that the system should incentivise them to correct such issues proactively.
Omondi further questioned the recoverability of a large share of tax debts reflected in government books, suggesting that much of the outstanding amount stems from system-generated errors, penalties, interest charges, and long-standing disputes rather than actual collectible revenue.
In addition to a standing amnesty programme, he advocated for the creation of an independent body to assess requests for waivers on penalties and interest. He argued that such decisions should not be left solely to institutions whose primary mandate is maximising revenue collection.
According to him, an independent panel would be better placed to objectively evaluate genuine cases and determine eligibility for relief.
Concerns Over Revenue-Centric Budget
The discussion on tax administration formed part of a wider debate on Kenya’s fiscal direction, with panellists expressing concerns that the 2026/27 budget prioritises revenue mobilisation at the expense of investment, employment creation, and economic expansion.
Wangari Kebuchi questioned whether rising taxation and public expenditure were delivering meaningful benefits to citizens, arguing that the core role of government is to provide services that enable people to achieve their full potential.
She noted that many Kenyans remain unconvinced that increased tax collections and spending have translated into improved services or better living standards.
Kebuchi added that despite positive economic growth projections, households continue to struggle with escalating living costs, healthcare expenses, educational demands, and weakening purchasing power.
She maintained that while economic indicators may point to growth, many citizens are yet to experience tangible benefits, adding that the budget offered little reassurance that this gap would be addressed.
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Equity Group’s Lydia Ndirangu argued that Kenya’s challenge lies less in policy formulation and more in implementation. She stressed the need for accountability in delivering on policy commitments, noting that government revenue and expenditure targets have often failed to meet expectations.
Visible Industries CEO Anthony Mwangi delivered one of the sharpest critiques of the budget, contending that public spending should be evaluated based on its capacity to boost production, generate jobs, and attract investment.
Applying what he described as a “theory of purpose”, Mwangi said the budget fell short on all three measures.
He argued that key productive sectors, particularly manufacturing, continue to receive inadequate support despite their significant contribution to employment and economic output. Mwangi likened the government’s priorities to focusing on peripheral issues while overlooking transformative investments capable of driving substantial economic growth.
The panellists concluded that sustainable revenue growth cannot be achieved through tax administration measures alone and called for greater emphasis on business support, investment expansion, and productivity enhancement.
