Members of Parliament have raised the alarm over a deepening tax dispute between the Kenya Revenue Authority (KRA) and the National Government Constituency Development Fund (NG-CDF), warning that unresolved arrears amounting to Ksh2.4 billion could cripple operations in hundreds of constituencies.
The standoff stems from unpaid taxes dating back to 2020, with MPs urging the National Treasury to intervene before development activities including bursaries, project supervision, and constituency office expenses are disrupted. According to documents tabled before the National Assembly Committee on Finance by Treasury CS John Mbadi, KRA is demanding taxes from 288 constituencies, covering both past and current liabilities.
The arrears include Ksh1.4 billion in Pay As You Earn, Ksh506 million in withholding tax, and Ksh460 million in VAT. Several constituencies including West Mugirango, Kitui Rural, Homa Bay Town, Suba South and Molo are flagged, with 21 already filing formal objections.
At the heart of the confrontation are disagreements over the validity of the assessments, the period covered, the legal basis for arrears dating beyond five years, and the accuracy of audit methods used. NG-CDF managers insist that some charges were imposed without consultation or breakdowns explaining how the figures were computed. They also argue that CDFs were formally designated as withholding agents only in August 2018, a position KRA has dismissed.
KRA maintains that it followed the law, noting that assessments can exceed five years in cases involving neglect or suspected fraud. The authority further explained that when constituencies fail to produce required documents during compliance checks, it relies on available financial statements an approach NG-CDF argues does not reflect real project timelines.
The issue has divided MPs. Soy MP David Kiplagat urged Treasury to consider a bailout, saying similar interventions have been extended to other national institutions. But Homa Bay Town MP Peter Kaluma rejected the idea, insisting that NG-CDF must pay what it owes.
Concerns spilled into the House after Mwingi Central MP Gideon Mulyungi reported that CDF managers were already receiving letters directing them to settle the arrears. He warned that without urgent clarity, constituencies could soon be unable to function.
 and the National Government Constituency Development Fund (NG-CDF), warning that unresolved arrears amounting to Ksh2.4 billion could cripple operations in hundreds of constituencies.){kind=link}