The Lower Eastern Times Opening The Third Eye
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The National Assembly’s Finance Committee has rejected a proposal by the National Treasury to eliminate a 15% corporate tax incentive currently granted to real estate developers and local motor vehicle assemblers.
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The Treasury had sought to amend the Third Schedule of the Income Tax Act to scrap the reduced tax rate for companies building at least 100 housing units annually, as well as firms involved in local vehicle assembly.
However, during public hearings on the 2025 Finance Bill, stakeholders in both sectors strongly opposed the plan, warning that removing the incentive would discourage investment.
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In its latest report, the committee—chaired by Molo MP Kuria Kimani—backed the stakeholders’ views and recommended that Parliament reject the proposal.
“Eliminating the tax break would likely reduce investment in real estate and lead to higher housing costs, especially under the affordable housing initiative,” the report stated.
On the vehicle assembly incentive, the committee warned that removing it could harm the local automotive industry, emphasizing the importance of maintaining a predictable and stable tax regime to support business confidence.
Treasury CS John Mbadi presented a Ksh.4.2 trillion budget for the 2025/26 fiscal year in Parliament last week. His ministry aims to raise an additional Ksh.30 billion in revenue through the Finance Bill, which MPs are set to vote on before forwarding it to President William Ruto for assent.
The 2025 Finance Bill does not propose any new taxes—an apparent move to avoid public backlash, following last year’s deadly protests over the 2024 tax hikes.
