More problems for CDF as taxman demands Sh2.2bn arrears

The matter was raised on the floor of the House by Mwingi Central lawmaker Gideon Mulyungi, who expressed concern that fund managers from various constituencies had received letters from KRA demanding settlement of the tax arrears.

Mr Mulyungi, who also chairs the Decentralised Funds Accounts Committee, informed the House that most constituencies slapped with the arrears have disputed the figures. However, despite efforts by constituency fund managers and KRA management to resolve the matter, no solution has been reached. “Despite numerous engagements between the NG-CDF board and the KRA, the matter has remained pending,” Mr Mulyungi told the House.

As of May 31, 2025, KRA said the constituencies, whose names were not disclosed in the letter, owe a total of Sh2.2 billion.

Mr Mulyungi now wants Parliament, through the Finance and National Planning Committee, to intervene and help resolve the matter between the NG-CDF board and KRA. He further called on the committee, chaired by Molo MP Kimani Kuria, to organise a meeting with KRA to provide clarification on the current status of arrears owed by each constituency, including a detailed breakdown of the amounts.

In addition, Mr Mulyungi wants the committee to outline the specific steps being taken by KRA and the NG-CDF board to resolve the matter, including clear timelines for the settlement of all arrears. The new demands by KRA add to the many problems the fund is facing, as the clock ticks towards its winding up on June 30, 2026 under a court ruling.

Only last week, MPs raised concern that fund managers are yet to receive the first allocation of Sh19 billion from the National Treasury.

The lawmakers warned that if nothing is done between now and June 30, 2026, the fund risks winding up with arrears amounting to over Sh50 billion, a situation they said would greatly affect ongoing projects where fund managers have already committed resources to various contractors.

Last week, the National Treasury assured Parliament that it would disburse all monies to constituencies amounting to Sh58 billion before June 30, 2026, with each constituency expected to receive at least Sh7 billion per month beginning this month. Since the fund was declared unconstitutional last year by a three-judge bench for violating the principle of separation of powers, MPs have taken steps to ensure it is anchored in the Constitution to prevent its extinction.

To this end, Parliament passed the Constitution of Kenya (Amendment) Bill, 2025, which seeks to entrench three key funds into the Constitution.

The Bill, co-sponsored by Rarieda MP Otiende Amollo and his Ainabkoi counterpart Samuel Chepkonga, seeks to anchor the National Government Constituencies Fund (NG-CDF), the Senate Oversight Fund (SOF), and the National Government Affirmative Action Fund (NGAAF) in the Constitution. The Bill received overwhelming support during its consideration in August, with 304 MPs voting in favour of it and achieving the two-thirds constitutional threshold. It has since been forwarded to the Senate for consideration. However, the High Court has halted the process, stopping Parliament from submitting the Constitution of Kenya (Amendment) Bill, 2025 to President Ruto for assent.

Established in 2003 by then Ol Kalou MP Engineer Muriuki Karue—who sponsored the CDF Bill, 2003 as a private member’s Bill—the fund was enacted into law following its assent in December that year.

Now, it faces the prospect of coming to an end in just eight months’ time.​