Kenya State Think Tank Warns Raising VAT Risks Driving Firms to Informal Sector

Kenya · ECONOMY Key Facts —The warning: KIPPRA advised the National Treasury against raising value-added tax above the current 16 percent, arguing it would reduce consumption and push firms into the informal economy. —The threshold: KIPPRA modelling found that once VAT exceeds 16.3 percent, revenue elasticity turns negative, meaning higher rates start reducing total collections.…