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On February 25th 2026, Kenya's National Treasury collaborated with TaxDev in training staff on the use of micro-simulation models for Personal Income Tax (PIT) and Value Added Tax (VAT). The training, which was attended by 20 staff members, is designed to strengthen the internal capacity of the National Treasury in evidence-based tax policymaking.
To support participants in addressing evolving policy challenges, the training focused on building practical tax modelling skills. In the PIT modelling session, participants familiarised themselves with a PIT model developed jointly by the National Treasury and TaxDev. The model enables policymakers to simulate proposed changes to thresholds, rates, and personal relief, and to estimate the impact on government revenue as well as the distribution of the tax burden across income groups. During the practical exercises, participants analyzed several hypothetical reform scenarios, including the removal of personal relief and the introduction of additional higher income tax bands, helping them understand both the revenue implications of reforms and their potential distributional impacts.
In the VAT modelling session participants examined how VAT works across supply chains and how different policy treatments, such as exemptions, zero-rating, and reduced rates, affect tax revenue. Using an Excel-based VAT model, built using Kenya National Bureau of Statistics Supply and Use Tables data and tax administration data from the Kenya Revenue Authority, participants simulated the revenue effects of various policy changes, including exemptions for electricity, reduced VAT rates on fuel products, and the removal of certain exemptions. The training built on earlier initiatives supported by the International Monetary Fund.
The training marks an important step toward institutionalizing modern analytical tools within the National Treasury and ensuring that tax policy decisions are supported by stronger data analysis and evidence-based insights. By the end of the week participants were applying the insights gained from the training to respond to an urgent request to provide revenue estimates for proposed changes to VAT policy. Going forward, officials from the National Treasury will apply the PIT and VAT models in evaluating tax proposals under consideration for the Finance Bills and in strengthening tax expenditure analysis.
Photos of workshop participants (Photos by Dr. Alex Oguso, TaxDev Country Economist, Kenya)
Published on: 8th May 2026
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