The Potential and Justification for Taxing Wealth in Kenya

Successive governments of the Republic of Kenya have striven to enhance Domestic Resource Mobilisation (DRM) and address growing economic disparities. Several tax measures introduced by the government have either broadened the tax net, introduced new tax types and to some extent targeted the taxation of wealth albeit in the form of taxing capital gains.This report, based on a previous study by the National Taxpayers Association (NTA) in 2022, examines the potential for implementing a focused wealth tax regime.

To inform this examination, this report analyses the insights gathered from key stakeholders, including interviews conducted during NTA’s 2022 study with individuals, corporations, revenue authority officials, treasury officials, and other experts. The analysis undertaken here provides valuable perspectives on the current tax landscape and potential for wealth taxation in Kenya, serving as a foundation for developing an effective and contextually appropriate wealth tax system for the country. When based on understanding existing approaches to taxing forms of wealth, guiding constitutional principles, and international best practices, a well-designed wealth tax regime could significantly contribute to Kenya’s eco-social development goals without overburdening the broader population and impacting household savings.