The Lower Eastern Times Opening The Third Eye
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Proposed changes to the 2025 Finance Bill could undermine Kenya’s economic recovery and industrial growth, according to tax experts from Ernst & Young (EY).
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The firm has raised concerns over plans to eliminate VAT exemptions for specific sectors, warning that imposing the standard 16% VAT on previously exempt goods and services—especially in tourism and manufacturing—could lead to higher consumer prices, reduced investment, and weakened sectoral competitiveness.
If enacted, the changes would see VAT applied to items like tourist transport vehicles, construction materials for tourism infrastructure, and components used in local vehicle assembly.
EY Associate Director Stephen Ndegwa noted that while the proposed measures may boost tax revenue in the short term, they could inflict long-term harm on industries crucial to employment, foreign exchange earnings, and Kenya’s broader economic transformation agenda.
