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Tenders are invited for Regulating Tax Incentives in Kenya for Enhanced Domestic Resource Mobilization Closing Date: 31 Jan 2025 Type: Consultancy About Oxfam Kenya Since 1963, Oxfam in Kenya has worked with partners in long-term development programs, humanitarian assistance, peace and conflict resolution programs and actively engaged in campaigning for better governance and equitable access to services. Oxfam in Kenya envisages a transformed Kenyan society in which each individual, regardless of gender, religion, ethnicity, or social standing, is able to access basic services, and fully participates in decision-making processes on issues that affect their lives and can be heard. Read more about Oxfam from https://kenya.oxfam.org/. The Governance and Accountability Pillar at Oxfam in Kenya supports a movement of citizenship in Kenya that is informed and active on tax mobilization, budget allocation and spending. We are also bold and brave in challenging taxation policies and practices and grounding our influencing work on research and evidence. About the Project: Strengthening Progressive Domestic Resource Mobilisation and Accountability Stakeholders to Improve the Social Contract in Africa This Project aims to support civil society coalitions to play a stronger role as Accountability Stakeholders on Domestic Resource Mobilization. These efforts aim to lift people out of poverty by strengthening transparency, accountability and citizen participation in public finance and public resource decision making. The overall objective of the project is increased progressive Domestic Revenue Mobilization through strengthened accountability partners, equitable revenue raising measures, meaningful public participation in public finance matters and inclusive, pro-poor budget making processes. Read more information about the Project here: https://kenya.oxfam.org/what-we-do/governance-and-accountability. Background Governments are motivated to deliver public services and programs for their citizens. To achieve this, they primarily depend on two main funding streams: foreign aid and domestic resource mobilization to fund these services. In the quest to deliver public projects, Governments impose taxes primarily to generate revenue necessary for funding public services and infrastructure, such as healthcare, education, and transportation systems. This revenue is crucial for maintaining the functionality of the state and ensuring the provision of essential services to citizens. Tax Incentives are measures that provide for a more favourable tax treatment of certain activities or sectors compared to what is granted to the general industry. Governments in Africa offer tax incentives primarily to attract foreign direct investment (FDI) and stimulate economic growth in a competitive global market. Majority of countries have tax incentives provided for in their tax laws. These incentives, which may include tax holidays, reduced rates, and investment allowances, are designed to enhance the profitability of investments in key sectors such as manufacturing, agriculture, and technology. By creating a more favorable investment climate, governments aim to counteract the challenges posed by political and economic instability that often deter investors. Furthermore, tax incentives are seen as a strategic tool to diversify economies that have historically relied on extractive industries, promoting industrialization and job creation. Problem Statement The Kenyan government has previously offered tax incentives to bolster various programs and projects while encouraging private sector investment in key sectors. These incentives usually serve different purposes such as to stimulate sectoral growth, encourage trade and investment as well as help make a country seem more attractive in the global market. In Kenya, these incentives include tax holidays, Capital Investment Allowances on Industrial Buildings, Investment Deductions, accelerated depreciation, special economic zones, investment subsidies, reductions in tax rates and indirect tax incentives like input VAT claims. While tax incentives are a mechanism to attract foreign direct investment, however, this leads to increased unhealthy competition between developing countries and regional partners where policy makers look to match, or even surpass, their regional neighbours by offering more generous concessions. The Kenya National Tax Policy (2023) recognizes that revenue collection, as a share of Gross Domestic Product (GDP) continues to decline due to various factors including increase in tax incentives. In 2021, Kenyas tax expenditure accounted for 2.61% of its GDP, slightly below the African average of 2.9%.[1] Despite tax increases over time, the government consistently fails to meet its revenue collection targets. The Q3 Economic and Budget Review Report[2] for 2024 showed that the total revenue collection fell short of the projected target by Ksh. 208.1 billion. Therefore, actual benefits of these tax incentives on the economy remain questionable, highlighting the necessity for an assessment of their effectiveness, usefulness and implications General objective and specific objectives of the study General Objective To evaluate the effectiveness and impact of existing tax incentives in Kenya. Specific Objectives Identify and analyse the various types of tax incentives in Kenya and the legal frameworks governing them. Establish the key sectors benefiting from tax incentives and their impact on sectoral growth and investment. Evaluate the fiscal cost of tax incentives, including revenue losses and implications for public finance. Assess the level of transparency and accountability in the design and implementation of tax incentives. Provide actionable recommendations for policy reform to enhance transparency, equity, and accountability. Scope of the study and approach and methods, establishing the basic methodological requirements A mix of qualitative and quantitative approaches comprising of structured desk reviews, Key Informant Interviews, stakeholders engagement and a poster pitch that well presents data in simple and graphical way using visual aids, to quickly communicate trends, patterns, and relationships within the data. This study will use both quantitative and qualitative data collected from both primary and secondary sources. The data will be robust, verifiable, well-referenced and collected using ethical practices. The consultant will propose a method of analysis and subsequent presentation. The report should be presented in a logical, strategic, reader friendly and simple language. Consultancy Team: Qualifications and Skills needed At the minimum, the consultant(s) must possess the following: At least a Masters in Law, Economics, Tax Administration, Public Policy, Development Finance, Business administration or any other related discipline in Development studies. Demonstrated academic qualifications or experience in law, economics, political science, tax administration or any other related discipline in Social Science. Experience in evidence-based Policy Research and Analysis, Development Research and Policy, Public Policy Analysis and Economic Policy Analysis. Experience in working on Economics, Finance, Tax Policy or Law in both public and private sector. Demonstrate a good understanding of the Kenyan context particularly economic and social context with practical working experience in the country. Be conversant with current fiscal and economic laws, policies and practice in Kenya. Practical application of cross cutting themes like gender mainstreaming, M&E, Advocacy. Excellent analytical and report writing skills. Experience of effective interaction with local and national institutions, both government and private sector as well as International Institutions on economic, tax policy, public finance, international finance and related areas. Ability to engage and convene diverse stakeholders from private sector, government, policy makers, and non-governmental organisations. 7. Schedule, budget, logistics and deliverables. The consultancy will be for a maximum of 50 working days from the date of signing of the contract. The Schedule is as follows: Activities Timeline Inception Report which should detail the following: The consultants clear understanding of the proposed assignment Methodology to be used for the assignment. Data types, collection plans and analytical approach Data collection tools Overall work plan for the assignment Within 10 days after signing the contract First draft 10 working days after submission of the Inception Report 1 multi-stakeholder consultative workshop 10 days after submission of the first draft Revised Second Draft 5 days after the consultative workshop Presentation for Internal Peer Review 5 days after submission of revised second draft Final Draft 5 days after internal peer review 1 launch and dissemination workshop 5 days after submission of the final draft 7. Key Deliverables The successful consultant(s) will be expected to deliver the following: An inception report outlining approach to the assignment, timeframe, deliverables, etc. Questionnaires and Tools for interviews and discussions with resource persons at Oxfam and stakeholders A first draft 1 stakeholder consultative workshop A revised draft after stakeholder consultation A final report. A finalized poster pitch summarizing the findings. 1 launch/dissemination workshop 8. Study responsibilities and management arrangements The consultant shall work under the direct supervision of the Global Inequality Influencing Programme Officer. 9. Dissemination strategy, plan and responsibilities for sharing and using the findings. The research and analysis shall be used by Oxfam in Kenya and partners to better understand the dynamics tax in Tender Link : https://reliefweb.int/job/4125355/tor-regulating-tax-incentives-kenya-enhanced-domestic-resource-mobilization
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