Ruto faults imbalance in tax payments from MSMEs as KRA targets more remittances

Speaking during the Taxpayers’ Dinner in State House, Nairobi, on Wednesday evening, President Ruto noted that MSMEs contribute 33% of Kenya’s GDP and employ close to 15 million people, translating to 86% of the national workforce, yet they account for just 1% of tax revenue.

He insisted that tax remittances aid in nation-building, and should not only be a legal obligation but also an "act of patriotism and solidarity" to develop the nation.

"It is a collective effort that calls for participation, contribution, and shared responsibility," he said.

To bridge the gap, President Ruto noted that the Kenya Revenue Authority, the national taxman, has established the Micro & Small Taxpayers Department dedicated exclusively to individuals and MSMEs.

The new unit is focused on serving the 1.2 million MSMEs currently in the tax base and will facilitate the onboarding of over 5 million more, delivering simpler processes, personalised support, and a fairer and more accessible tax experience.

"While 3 million Kenyans in formal employment contribute Ksh.600 billion in taxes annually, the remaining 17 million registered taxpayers contribute only Ksh.17 billion," noted Ruto.

KRA has also rolled out the electronic rental income tax system, which aims to collect Ksh.80 billion annually, up from the current Ksh.14 billion.

President Ruto maintained that Kenya can better develop if citizens are tax compliant.

KRA says it has surpassed the Ksh.2.57 trillion in tax collections, and targets to hit the Ksh.3 trillion mark this financial year.