Kenya To Introduce Algorithm-Based Tax Collection

By Magdalene Wanja - Reporter

Kenya, 31 October 2025 - The government has announced plans to implement algorithm-based tax collection within the next two years.

Chair of the President’s Economic Council, Dr David Ndii, made the announcement on Friday during the annual NCBA Economic Forum, noting that advancements in technology have made this transition both feasible and necessary.

According to Dr Ndii, Kenya’s growing digital penetration has made it possible for the government to better assess the income of individuals in the informal sector, a segment that has long remained outside the tax net.

He revealed that the government is in the process of developing a machine learning model to carry out tax assessments.

This initiative follows the success of previous models that have been used for health premium calculations and to determine credit scores for Kenyans under the Hustler Fund programme.

“In a year or two, most of our taxes will be collected by algorithms, not by people. We are not planning to collect taxes the old way. This is made possible by AI and the high penetration of digital finance in a country at our level of development,” Dr Ndii said.

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He explained that the new system is expected to bring an additional 2.5 million taxpayers into the tax bracket—individuals who earn incomes comparable to those on formal payrolls, but currently remain untaxed.

He criticised the existing tax structure for focusing primarily on employers and salaried workers, describing it as a “lazy approach” that overlooks the majority of earners.

“We estimate that there are about 2.5 million taxpayers with incomes equivalent to people on payroll. They include professionals such as doctors in private practice. If people are in the same labour market with the same capacity and education, it follows that their earnings are roughly the same. Proof? Look at where they live, they are your neighbours,” he added.

The remarks come as NCBA revised its economic growth outlook for 2025 to 5%, whilst cautioning that any attempt by the government to increase taxes in the upcoming fiscal year could face significant public resistance.