Completed Project

Climate-Friendly Tax System: An Evaluation of Kenya’s Tax Policies for coherence with climate change goals

Like many developing countries, Kenya has been heavily impacted by climate change. The country has experienced droughts, unpredictable weather patterns, and, in the recent past, invasion by desert locusts. These events are estimated to have resulted in social economic losses of approximately 3 per cent to 5 per cent of GDP annually in the past decade.
Kenya has shown its commitment to tackling climate change by ratifying international agreements like the Paris Agreement and establishing a robust framework of laws, policies, strategies, action plans, and institutions to implement adaptation and mitigation plans for climate change.
Countries globally have adopted various fiscal and sectorial policy measures to address climate change. Tax policies have been recognised as important for supporting initiatives on climate change across multiple sectors and this is achieved in two ways: first, by providing tax incentives to encourage investment in smart climate solutions, and second, by imposing taxes to discourage emission of Green House Gases and raise revenue.
Against this backdrop, this study examines Kenya’s tax policies, introduced between 2016 to 2022, to establish whether they are aligned with national goals and commitment on climate change. The findings will provide insights to policymakers on the extent to which tax policies have been utilised to achieve the country’s climate change agenda.
The study is carried out primarily through desktop research of Kenya’s tax laws, national and sectorial policies on climate change, and relevant literature, complemented by interviews with key stakeholders from government, among other key players. It answers the following research questions:
  • What tax measures have been introduced in Kenya between 2016 and 2022 that are relevant to climate change?
  • What trends and patterns can be observed in the amendments made to tax law within this period in relation to Kenya’s efforts to address climate change?
  • To what extent do the taxes or incentives introduced in Kenya within this period support the country’s commitment to addressing climate change?

Researchers

Catherine Ngina Mutava

Catherine Ngina Mutava is the Associate Director of the Strathmore Tax Research Centre in Kenya. She holds a Master of Laws degree in International Taxation from New York University and a Bachelor of Laws degree from the University of Nairobi. She is as an author and editor for the IBFD in charge of research and publications covering various countries in Africa. She was previously an ICTD Researcher in International Tax (Tax Treaties).

Linda Muthoni

Linda Muthoni is a partner at Lexlink Consulting in Kenya, where she leads on tax and public policy research and advocacy. She holds a Master’s degree in Public Policy Management from Strathmore University, a Bachelor of Commerce degree from the University of Nairobi, and is a Certified Public Accountant of Kenya. With over 15 years of experience in tax, finance, and public policy, Linda has previously worked as a Tax Consultant at Ernst & Young, and as a Tax Manager at Standard Chartered Bank.
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