The International Monetary Fund’s new Fiscal Monitor chapter identifies twelve tax‑policy measures that governments, including Kenya, can adopt to stimulate growth without increasing headline rates.

On value‑added tax, the IMF urges countries to curb unnecessary exemptions and to speed up input‑tax recovery so firms are not effectively taxed on their operating costs.

The fund recommends allowing faster recovery of investment costs, reducing the tax burden on capital spending and making new projects more attractive.

It also calls for smoothing business‑tax thresholds that currently trigger sharp liability jumps when firms cross size limits, a practice that can deter expansion.

For research and development, the IMF suggests targeting incentives to additional R&D activity and strengthening verification to ensure relief reaches qualifying projects.

Employment‑related tax systems should be redesigned to make work more financially rewarding while protecting low‑income groups, with a separate focus on strengthening in‑work support.

The IMF stresses improving tax administration through better registration, filing, payment and compliance processes, and leveraging technology and data for more effective collection.

Where fiscal space allows, the fund proposes shifting part of the tax base toward economic rents, arguing that rent‑based taxation creates fewer distortions than current approaches.