Nairobi County to introduce tax discounts to boost revenue collection
By Lucy Mumbi |
The discounts may involve reducing the tax burden by a certain margin, providing a tangible benefit to those who fulfil their tax obligations.
The Nairobi County Government has announced plans to introduce rewards and discounts starting in July, in a bid to improve revenue collection for financial year 2024/25.
The county currently generates revenue from various sources, including land rates, parking fees, single business permits, building permits, advertisements, billboards, housing rents, markets, fire certificates, food handlers’ certificates, and liquor licence fees.
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Governor Johnson Sakaja's administration says one significant approach is to offer discounts to compliant taxpayers, to incentivise prompt tax payments.
The discounts may involve reducing the tax burden by a certain margin, which will provide a tangible benefit to those who fulfil their tax obligations.
As of June 2023, the county's total cumulative internal revenues stood at Sh10.56 billion, representing 59.5 per cent of the revised target of Sh17.75 billion. The underperformance was particularly notable in key revenue streams, including rates, single business permits, parking fees, and billboards.
"The underperformance mainly affected the key revenue streams, namely rates, single business permits, parking fees, and billboards that make up the major internal sources contributing the major component of the internal revenue," acknowledged the county.
To address this challenge, Nairobi County has outlined several strategies for the upcoming financial year.
These strategies include establishing a digital linkage between the land office property records and Nairobi County valuation records, investing in technology for automated and efficient tax collection, and encouraging business formalization through incentives.
The county also plans to strengthen and update regulatory frameworks to enhance compliance, invest in data analytics for better decision-making and revenue forecasting, and diversify revenue sources to reduce dependence on specific sectors such as parking and land rates.
Updating and digitising property ownership records for accurate tax assessments, enhancing enforcement mechanisms across all revenue streams, and conducting revenue administration reforms to enhance accountability are also on the agenda.
"The fate of Nairobi County’s performance will have a significant influence on the country’s general performance because it is singly the largest contributor to the country’s economy and wellbeing."
With a population of approximately 4.3 million and 1.4 million households, Nairobi plays a vital role in Kenya's economic landscape.
The success of revenue collection initiatives in the capital city is not only crucial for the county's financial health but also holds substantial importance for the overall well-being of the entire nation.
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