National Assembly Passes Finance Bill 2025

NAIROBI, Kenya Jun 19 – Kenyans can breathe a sigh of relief as the National Assembly passed the Finance Bill 2025 after stripping the proposal allowing the Kenya Revenue Authority (KRA) unfettered access to customer records.

The bill which is expected to raise Sh24 billion now awaits assent by President William Ruto.

The house approved the amendments by the Finance and Planning committee chaired by Molo Member of Parliament Kimani Kuria which rejected KRA’s proposal for unrestricted access to personal data for tax compliance, arguing that it violates Article 31(c) and (d) of the Constitution, which guarantees the rights to privacy.

The committee had argued that Section 60 of the Tax Procedures Act already provides sufficient authority for data access through judicial warrants.

The lawmakers also rejected the expansion of the PAYE tax bands to 10 per cent, 17.5 per cent, 25 per cent, 27.5 per cent and 30 per cent, which would have empowered the Treasury Cabinet Secretary to adjust rates by up to 10 per cent every three years for inflation.

The House also rejected Treasury’s proposal to reclassify certain commodities from zero-rated to exempt status, instead maintaining zero-rated status for locally assembled mobile phones, motorcycles, electric bicycles, solar batteries, electric buses, animal feed inputs, and bioethanol vapor stoves.

For the cooperative incentives, the MPs rejected the elimination of the 15 per cent corporate tax rate for companies engaged in local motor vehicle assembly and construction of at least 100 residential housing units.

MPs retained the Sh500 excise duty per litre on Extra Neutral Alcohol (ENA) for licensed spirituous beverage manufacturers, providing relief to manufacturers already facing increased duties.

Legislators also supported full tax exemption for all pension payments, whether received as lump sums or instalments, creating clarity by repealing redundant provisions.

In the amendements, the house supported expanding the Significant Economic Presence Tax (SEPT) definition to include websites and electronic networks beyond digital marketplaces.

However, they opposed the Sh5 million threshold, arguing it creates revenue leakage loopholes and hinders KRA enforcement.