The Lower Eastern Times Opening The Third Eye
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The National Assembly has approved the Finance Bill 2025, paving the way for its enactment pending presidential assent.
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The Bill was passed on Thursday, June 19, after final deliberations and a vote following the conclusion of its Third Reading the previous night.
In its current form, the Bill includes several key revisions aimed at protecting taxpayers. One major amendment removed a proposal that would have granted the Kenya Revenue Authority (KRA) unrestricted access to personal financial data, a move MPs said would violate constitutional privacy rights under Article 31(c) and (d).
The Bill now targets raising KSh24 billion in revenue—lower than the original projection of KSh30 billion by the National Treasury—and contributes to the broader KSh3.316 trillion revenue target for the 2025/26 financial year.
Finance Committee Chair Kimani Kuria highlighted that this is the lowest revenue-raising target in recent years, comparing it to past figures: KSh22 billion (Finance Act 2022), KSh211 billion (Finance Act 2023), KSh344 billion (the rejected Finance Bill 2024), and KSh49 billion (Tax Laws Amendment Act 2024).
Lawmakers also struck down proposals to expand the PAYE tax bands and grant the Treasury Cabinet Secretary powers to adjust income tax rates every three years to reflect inflation.
Parliament further blocked a move to change the tax classification of several essential goods from zero-rated to exempt—preserving zero-rated status for items like locally assembled phones, motorcycles, electric bikes, solar batteries, electric buses, animal feed ingredients, and bioethanol stoves.
Additionally, MPs rejected the scrapping of a 15% corporate tax incentive for firms involved in local motor vehicle assembly and large-scale affordable housing projects.
The House retained the KSh500 excise tax per litre on Extra Neutral Alcohol (ENA) used by licensed spirit manufacturers, easing pressure on the industry amid rising production costs.
Other approved provisions include a full tax exemption on all pension payments—whether lump sum or periodic—and the elimination of outdated tax laws for improved clarity.
Parliament also broadened the scope of the Significant Economic Presence Tax (SEPT) to cover websites and digital platforms beyond online marketplaces. However, MPs rejected a proposal to introduce a Sh5 million threshold for taxation under SEPT, citing concerns over potential revenue losses and enforcement challenges.
