Nairobi — Tax expenditure grew to Sh393.6 billion last year, despite the removal of waivers by the government.

The latest Tax Expenditure Report from the National Treasury shows that this increased from Sh292.9 billion in 2021.

High tax expenditure is when the state gives individuals and companies lots of tax breaks.

Domestic value-added taxes (VATs) contributed the most to total tax expenditures (36.94 percent), followed by corporate income tax (19.87 percent).

Others were VAT on fuel (16.38 percent) and excise duty (0.55 percent).

"To ensure sustainability and value for money from the resources foregone through tax expenditure, the Government will continue to rationalize and harmonize the tax expenditures with the aim of removing redundant tax expenditures while enhancing those intended to promote investments," the 2023 report reads.

"Further, the National Treasury is in the process of automating tax exemption processes which will create efficiency in terms of time taken to process the exemption."