Kenya’s government is set to automate tax collection through AI-powered algorithms within the next two years, marking a radical shift in how the country mobilises revenue from its fast-growing digital economy.
President William Ruto’s chief economic advisor, Dr. David Ndii, announced the plan during the launch of NCBA’s Economic Forum in Nairobi, saying the government intends to replace traditional enforcement with algorithmic efficiency.
“In a year or two, most of our taxes will be collected by algorithms and not by people. We are not planning to collect taxes the old way,” Ndii said.
The approach will leverage Kenya’s extensive digital finance infrastructure — particularly mobile money platforms like M-Pesa and Airtel Money — to detect income flows, curb tax evasion, and tap into the country’s vast informal economy.
AI-driven revenue intelligence
By analysing transaction data, the new system will identify undeclared income and spending patterns in real time, addressing what Ndii described as an “anomaly” that costs Kenya Sh1.28 trillion annually in uncollected taxes.
The Kenya Revenue Authority (KRA) will evolve from a traditional enforcement body into a technology-driven systems manager, while 10,000 new field agents will support citizens in registration and compliance, similar to telco service representatives.
Fiscal modernisation through automation
The initiative builds on KRA’s broader digitalisation strategy, which includes its Micro and Small Taxpayers (MST) Department to support small businesses and drive voluntary compliance. Despite reforms, KRA fell slightly short of its 2024–2025 income tax target, collecting Sh1.093 trillion against a goal of Sh1.125 trillion.
VAT reform and consumer focus
Ndii also revealed plans to restructure Kenya’s VAT system, using technology to deliver direct VAT refunds to consumers rather than manufacturers — a shift designed to reduce administrative bottlenecks and ensure fairness.
“Technology will now allow us to give VAT refunds directly to consumers. But for us to give you a tax credit, you must first be a taxpayer,” he said.
A model for Africa
The AI tax collection initiative could set a precedent across Africa, where informal sectors contribute up to 60% of GDP, according to the African Development Bank. If successful, Kenya’s experiment could become a continental template for fiscal technology, showing how AI can improve revenue efficiency without raising taxes or increasing debt.
As Ndii put it, Kenya is “not just digitising tax collection, but reimagining it” — positioning the country as a continental pioneer in AI-driven public finance management.
