CS Mbadi Reveals Plans to End Zero-Rated VAT Status for Affordable Housing

Treasury Cabinet Secretary John Mbadi announced that the government proposes to move affordable housing from zero-rated VAT to VAT-exempt under the 2026 Finance Bill. Mbadi stated that the change aims to simplify tax administration and reduce opportunities for misuse of tax-exempt construction materials. He noted that the zero-rated status was initially introduced to attract investment, but a review showed it was not adding enough value. The CS also cited challenges in verifying that exempt materials are used for affordable housing, leading to revenue losses.