NAIROBI, Kenya – The Kenya Revenue Authority (KRA) has unveiled an ambitious plan to net Sh300 billion from 11 million personal identification number (PIN) holders in the informal sector by the end of the current financial year.
The move seeks to tap into one of the country’s largest yet under-taxed economic bases, which accounts for nearly half of Kenya’s GDP.
KRA data shows Kenya has over 21 million registered PIN holders, but fewer than nine million actively file returns or pay taxes.
This leaves millions of micro, small, and medium enterprises (MSMEs) operating outside the formal tax net. According to George Obell, head of KRA’s Micro and Small Taxpayers Department, integrating these businesses is both a fiscal necessity and a development opportunity.
“MSMEs contribute between 40 and 50 P.c of GDP and employ most Kenyans, yet their tax contribution does not reflect their economic weight. This initiative is about fairness and sustainability,” he said.
Unlike previous tax drives, the strategy will not rely primarily on enforcement and penalties. Instead, KRA plans to simplify compliance by expanding accessibility.
More than 10,000 tax agent centres will be established across the country, supplementing KRA’s existing 136 offices. The model draws inspiration from agency banking, which brought financial services closer to ordinary Kenyans.
Obell noted that the aim is to make compliance user-friendly, reducing barriers that discourage informal traders from registering or filing returns.
“Our approach is to offer support rather than create fear. We want small traders to see compliance as an enabler of growth, not just a legal obligation,” he explained.
The informal sector, comprising market vendors, boda boda operators, artisans, and small-scale traders, has long been difficult to tax due to its fragmented and cash-driven nature.
Analysts say KRA’s plan could significantly boost state revenue if executed properly, but warn that overzealous taxation risks pushing vulnerable businesses out of operation.
Tax expert Millicent Nyaga told reporters: “This is a delicate balancing act. The state must raise revenue, but the informal sector also needs incentives and capacity-building. If handled wrong, these traders could feel overburdened and resist compliance.”
The rollout will also feature digital platforms, capacity-building forums, and partnerships with business associations to help small traders understand their obligations.
KRA officials maintain that greater compliance will eventually benefit MSMEs by improving access to credit, formal contracts, and government support schemes.
If successful, the plan could help close Kenya’s widening fiscal deficit, reduce reliance on external borrowing, and create a culture of voluntary compliance among millions of small traders who form the backbone of the economy.
For now, the informal sector, long seen as untouchable by the taxman, has become the centre of Kenya’s next big revenue battle.
