NG-CDF faces fresh headwinds as KRA moves to recover Sh2 billion tax arrears
According to KRA, as of May 31, 2025, constituencies owe a total of Sh2.2 billion, although the specific constituencies were not named in the communication.
The National Government Constituency Development Fund (NG-CDF) has been hit by fresh turbulence after the Kenya Revenue Authority (KRA) issued a demand for Sh2.2 billion in unpaid taxes, intensifying financial and legal challenges that threaten the fund’s continuity ahead of its planned phase-out next year.
The issue came to light when Mwingi Central Member of Parliament Gideon Mulyungi informed the National Assembly that constituency fund managers across the country had received letters from KRA demanding settlement of tax arrears dating back to 2021.
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He pointed out that the figures presented have been disputed in several constituencies, sparking concern among the leaders
According to KRA, as of May 31, 2025, constituencies owe a total of Sh2.2 billion, although the specific constituencies were not named in the communication.
Mulyungi, who chairs the Decentralised Funds Accounts Committee, urged Parliament to act swiftly through the Finance and National Planning Committee to address the standoff.
He further requested that the committee, led by Molo MP Kimani Kuria, hold a joint session with KRA to give a full update on the status of the arrears per constituency, including a detailed breakdown of the amounts.
He also wants clear timelines and steps from both the tax authority and the NG-CDF board on how the outstanding taxes will be cleared.
The tax arrears demand compounds existing problems facing NG-CDF, which is due to be wound up by June 30, 2026, following a court ruling that declared it unconstitutional.
MPs have in recent weeks raised alarm over the slow release of funds from the National Treasury, warning that delayed disbursements could derail numerous development projects.
Last week, MPs revealed that constituency fund managers are yet to receive the first Sh19 billion allocation, even as project commitments continue to pile up. They warned that if the situation remains unresolved, the fund could close with more than Sh50 billion in pending obligations, leaving contractors and communities stranded.
The Treasury has pledged to release Sh58 billion to constituencies before the 2026 deadline, with a monthly disbursement plan of at least Sh7 billion starting this month.
This is meant to ensure that projects already underway can be completed before the fund’s possible closure.
In response to the court decision, legislators passed the Constitution of Kenya (Amendment) Bill, 2025, seeking to embed the NG-CDF, the Senate Oversight Fund, and the National Government Affirmative Action Fund into the Constitution.
The Bill, co-sponsored by Rarieda MP Otiende Amollo and Ainabkoi MP Samuel Chepkonga, passed with overwhelming support after 304 MPs voted in favour, surpassing the two-thirds threshold.
The Bill has already been transmitted to the Senate for further consideration. However, the High Court has since issued orders barring Parliament from submitting it to the President for assent, stalling efforts to give the fund constitutional protection.
The NG-CDF was established in 2003 through legislation sponsored by then Ol Kalou MP Engineer Muriuki Karue.
Two decades later, the fund now faces the possibility of being dissolved within eight months amid legal uncertainty, delayed funding, and now a Sh2.2 billion tax dispute.
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