The Kenya Revenue Authority (KRA) has suspended all tax relief payments from February 28, 2022.
In a statement, the tax man said the decision was reached after consultation with Treasury adding that it had also received concerns from taxpayers.
In the last five years, KRA has granted tax reliefs and incentives amounting to Sh610 billion.
"The move to suspend the payment of tax relief allows KRA to audit and enhance the tax relief process and procedures," the statement reads in part.
The taxman says it will comply with the law by assessing and processing the tax reliefs during the process but payments will not be disbursed until the end of the process.
According to KRA, the suspension and review of the tax reliefs are aimed at increasing the impact of tax expenditure on economic growth which it says will be achieved by minimising tax expenditure and aligning it with international best practices for better internal revenue.
The taxman remains optimistic that enhancing the reliefs will offer a permissible issuance of tax exemptions and ensure an equitable procession of tax reliefs.
This KRA says is part of the Kenya Kwanza administration strategy to seal revenue leakage and enable the tax collector to mobilize more taxes for the country's growth.
The changes have been inspired by President William Ruto's aggressive revenue mobilization plan aimed at enhancing revenue collection and redirection of resources to finance priority growth supporting programs.
The move is also aimed at powering the Bottom-Up transformation agenda.