The new tax proposals are the same or a variation of the content of Finance Bill 2024, which the government shelved in June following anti-tax protests.
Kenyans from various sectors have rejected several proposals in the Finance Bill 2025, citing concerns over increased taxation on essential goods, invasion of privacy, and scrapping of tax incentives for affordable housing.
Key objections include the proposed shift of essential goods from zero-rated to standard VAT at 16 pr cent, which stakeholders warn will drive up the cost of living from July 1, 2025.
They also oppose provisions that would grant the Kenya Revenue Authority (KRA) access to trade secrets, private data, and personal phone usage.
Stakeholders appearing before MPs during public hearings also opposed the removal of tax rebates for companies that build at least 100 mass residential units annually, arguing it will undermine affordable housing efforts.
Other contentious proposals include: Granting KRA powers to issue demand notices even when a case is pending at the Tax Appeals Tribunal or the High Court, limiting the carry-forward of bad debt claims to five years, disallowing tax deductions for sports sponsorship and mandatory issuance of eTIMS invoices by all businesses, including ride-hailing platforms such as Bolt and Uber.
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Stakeholders further criticised the proposal to remove the 15 per cent tax rebate for property developers constructing over 100 housing units per year.
The Kenya Property Developers Association warned that this would discourage investment, raise property prices, and hinder affordable housing.
“The Finance Bill contradicts the government’s agenda of promoting affordable housing through tax incentives,” said association’s Managing Director, Rose Kananu.
The aviation sector also raised concerns. Mbuvi Ngunze, Chair of the Kenya Association of Air Operators, told the committee that applying VAT, Railway Development Levy, and Import Declaration Fees on aircraft and parts would cripple the industry due to higher purchase and leasing costs.
Stakeholders urged lawmakers to retain Section 15(4) of the Income Tax Act, which allows taxpayers to carry forward income tax losses indefinitely.
“The proposed change would adversely affect companies with heavy capital expenditures, whose tax deficits - driven by substantial capital allowances - often extend beyond five years,” they said.
Telecommunications firms, including Safaricom and American Tower Company Kenya Ltd, rejected a clause limiting the carry-forward of tax losses to five years. “Capital-intensive projects need long-term tax planning. Capping loss carry-forward undermines investor confidence,” Safaricom said through a PwC submission.
The East African Device Assembly Kenya Ltd urged MPs to exempt VAT on raw materials and components used in local smartphone assembly to lower production costs.
“We propose that inputs for approved mobile phone assemblers be VAT-exempt,” said company CFO Johnstone Kamunde.
Meanwhile, stakeholders welcomed a proposal requiring employers to apply all deductions, reliefs, and exemptions before calculating PAYE, as it would slightly increase employee take-home pay.
However, Kenya Women Parliamentary Association (Kewopa) noted the overall impact would be modest.
‘‘This procedural shift aims to ensure that employees receive the full benefit of available tax reliefs upfront, thereby slightly increasing their net take-home pay,” Venecity Kajuju, representing Kewopa Chief Executive Mercy Mwangi, told MPs
Stakeholders also opposed a clause allowing KRA exclusive rights to demand access to customers’ private or trade-related data, citing violations of Article 31 of the Constitution and the Data Protection Act.
The Kenya Women Parliamentary Association, led by chairperson Leah Sopiato Sankaire (centre), addresses the media at Parliament Buildings in Nairobi on January 16, 2025.
“The proposal conflicts with existing data privacy laws and could damage Kenya’s reputation as a regional tech and financial hub,” warned data and legal experts.
Ride-hailing firms argued that real-time generation of eTIMS invoices for every trip is impractical due to the high volume of transactions. Bolt said this would strain their platforms and affect service delivery.
Air operators, too, voiced concern about tax measures affecting the aviation industry’s competitiveness.
The Finance and National Planning Committee, chaired by Molo MP Kuria Kimani, is collecting public views on the Bill at the Edge Convention Centre in South C, Nairobi, and plans to visit ten counties from July 2, 2025.
Mr Kimani said the committee has received over 1,000 online memoranda and heard oral presentations from more than 200 stakeholders.
“We urge Kenyans to continue submitting their views through our QR code platform as we go paperless this year,” he said.
Molo MP Kimani Kuria addressing the media at his office in Nairobi on January 19, 2025 on the murder of activist Richard Otieno, alias Molo President.
Nearly all stakeholders who presented their views on the Finance Bill, 2025, rejected a proposal to grant the taxman exclusive powers to compel businesses to share or integrate data containing trade secrets and customers’ private or personal information.
The Alcoholic Beverages Association of Kenya (Abak) welcomed the shift in excise tax calculation for undenatured extra neutral alcohol from an alcohol-by-volume basis to volume-based taxation, and the rate reduction from Sh964/litre to Sh500/litre.
However, Abak Chairman Eric Githua warned that the high Kenyan tax rate compared to Tanzania Sh239.29/litre and Uganda Sh88.64/litre could still encourage smuggling and worsen the illicit alcohol trade.
‘‘However, the taxes imposed on ethanol in both Tanzania and Uganda remain significantly lower, which will continue to encourage smuggling into Kenya. As shown in the table below, Kenya charges Sh500 per litre, while Tanzania and Uganda levy the equivalent of Sh239.29 (TSh 5,000) and Sh88.64 (USh 2,500) per litre respectively,” said Mr Githua
