This is to cushion economies from Middle East war impact, drive growth The East African private sector has called for urgent harmonisation of tax proposals and fiscal measures ahead of the 2026-27 national budgets. This is in response to ongoing geopolitical tensions in the Middle East, saying the move will help cushion businesses from external shocks, enhance regional competitiveness, boost intra-regional trade and attract investment.
Proposed measures for Kenya (Finance Bill 2026) includes reforms on income tax where they have called for an extension in tax loss carry-forward from five to 10 years. The government should also consider excluding on-cash or unrealised items from repatriated income and align significant Economic Presence Tax (SEPT) thresholds with VAT.
On employment tax, they want an increase on tax-free threshold, widening tax bands to ease burden on low- and middle-income earners and restoration of pension and death benefit exemptions. Kenya should also extend withholding tax remittance deadline to 20 days and introduce deemed approval for tax exemptions if delays exceed 90 days, they said.
For VAT, the private sector have called for transitional fix for reduced refund window (24 to 12 months), remove mandatory VAT registration for non-resident digital suppliers, a review of VAT on fuel and petroleum products and a shorter VAT refund timelines for bad debts.
They also want a review of VAT registration threshold (Sh5 million) and rationalisation of exempt and zero-rated schedules. Excise duty reforms are also needed especially on exempting SACCO member fees from excise (mutuality principle). Proposed measures for Tanzania includes improvement in budget consultation timelines (currently inadequate), setting 30-day timeline for providing information to tax authorities (+ possible 15-day extension) and addressing of interest accumulation during tax dispute resolution.
They also want clarity on income tax on dividend rules, a reduction in skills development levy from 3.5 per cent to 2.5 per cent, removal of expiry (June 2026) on VAT deferment for imported capital goods and clarify on VAT responsibility for digital platforms, among others.
Private sector players also want Tanzania to introduce modern excise legislation, remove or offset excise on intermediary services, reassess policy after three -year excise freeze ends and reduce excise on electronic communication services from 17 per cent to 14 per cent.