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The National Treasury has cut its ordinary revenue projection for the 2026/27 financial year to KSh3.25 trillion, from KSh3.39 trillion, after tax collections fell behind target in the first months of the year, according to the Draft 2027 Budget Policy Statement (BPS), The Star reported on October 30, 2026.
Kenya revenue target 2026/27: the key numbers
| Item | Figure |
|---|---|
| Ordinary revenue target 2026/27 (revised) | KSh3.25trn (was KSh3.39trn) |
| Total revenue target 2026/27 | KSh3.631trn |
| Total revenue projection 2027/28 | KSh4.004trn (was KSh4.044trn) |
| Revenue collected, July–August 2026 | KSh488.9bn vs KSh516.9bn target |
| Ordinary revenue shortfall, end of August | KSh37.8bn |
| Ordinary revenue shortfall, end of September | KSh58.2bn |
| Income tax gap (to August) | KSh14.4bn below target |
| VAT gap (to August) | KSh12.6bn below target |
| Import duty (to August) | KSh31.7bn vs KSh30.2bn target |
Income tax and VAT lead the shortfall
“The underperformance was recorded across most of the major revenue categories, particularly income tax and value added tax (VAT), which were below target by Sh14.4 billion and Sh12.6 billion, respectively,” Treasury CS John Mbadi said in the BPS. Higher collections by ministries and agencies (appropriations-in-aid) cushioned the overall gap by KSh9.7 billion. Import duty was one of the few lines ahead of target.
A repeat of last year
The miss follows 2025/26, when the government collected KSh3.2 trillion against an initial target of KSh3.32 trillion, a gap of KSh122.9 billion. KRA has blamed PAYE, VAT and oil tax changes; see our report on KRA’s 2025/26 revenue miss.
Tax exemptions under review
The Treasury says it is reviewing tax exemptions and reliefs. Tax expenditure, the revenue given up through exemptions, deductions and other reliefs, fell to KSh262.6 billion in 2025 from KSh284.4 billion in 2024. VAT exemptions and reliefs were the biggest share at KSh175.8 billion, or 66.9% of the total. The Treasury expects total revenue to reach 18% of GDP by 2029/30.
What it means for taxpayers and businesses
- More enforcement: weaker collections usually mean tighter compliance drives. KRA is already checking more than a million landlords; see KRA’s landlord rental income checks.
- Exemptions at risk: with VAT reliefs the largest cost, goods and services that are exempt or zero-rated could be targeted in the Finance Bill 2027.
- Borrowing and pending bills: a revenue gap raises pressure to borrow or cut spending. The Treasury is preparing a mid-year budget; read about the first 2026/27 supplementary budget.
What happens next
The draft BPS goes to Cabinet and then to Parliament, where it sets ceilings for the 2027/28 budget. The final BPS is normally tabled by February 15. Public views on tax proposals come later with the Finance Bill 2027; our Finance Bill 2027 explainer covers the timeline.
FAQ
What is Kenya’s revenue target for 2026/27?
Total revenue of KSh3.631 trillion, with ordinary revenue revised down to KSh3.25 trillion.
How far behind is KRA?
Ordinary revenue was KSh58.2 billion below target by the end of September 2026.
Which taxes are underperforming?
Income tax and VAT, which were KSh14.4 billion and KSh12.6 billion below target by August.
Updated October 31, 2026.
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