Kenya to Use AI for Tax Collection, Aiming to Add 2.5 Million New Taxpayers

The Kenyan government is planning to adopt Artificial Intelligence (AI) to improve tax collection, targeting over 2.5 million people who are currently outside the formal tax system.

Dr. David Ndii, Chairperson of the President’s Council of Economic Advisors, explained that the government will move from voluntary tax disclosure to algorithm-based collection within the next year or two. With mobile phone penetration now widespread, it is easier to track economic transactions, even in the informal sector.

According to Dr. Ndii, the government already has tools to assess the incomes of individuals not on payroll. 

“We have the ability to determine the income of people in the informal sector, similar to how we assess health premiums and credit scores for programs like the Hustler Fund,” he said.

The new AI system will calculate taxes based on a person’s income and profile. For example, if someone is not on payroll, the system can still estimate their annual income and determine the appropriate tax contribution. 

This move will bring many professionals, including private practitioners like doctors, into the tax net.

Currently, the tax system mostly targets employers and employees on payroll, leaving a significant number of Kenyans untaxed. 

Dr. Ndii described this approach as “lazy” and stressed that individuals earning similar incomes to those on payroll should contribute fairly.

“We estimate that over 2.5 million taxpayers earn similar incomes to people on payroll. They are integrated into the same labor market and should be included,” he added.

Speaking at the NCBA Economic Forum, Dr. Ndii highlighted that algorithm-based tax collection will modernize Kenya’s tax system, making it more efficient and fair. 

However, he acknowledged that raising taxes could face public resistance, given the current socio-political climate. 

NCBA Bank also noted that any attempts to increase taxes in the 2026/27 fiscal year may encounter pushback.

The government’s adoption of AI in tax collection signals a major shift toward digital governance and improved revenue collection. 

By including informal sector workers, the plan is expected to expand the tax base, reduce evasion, and strengthen public finances.