List of Tax Proposals that MPs Have Rejected in Finance Bill 2025
- The National Assembly Committee on Finance and National Planning tabled its report on the Finance Bill 2025
- Led by Molo MP Kimani Kuria, the committee recommended changes to the tax measures proposed in the bill
- Kuria said the lawmakers listened to the views of Kenyans regarding measures such as giving Kenya Revenue Authority (KRA) access to personal data
Wycliffe Musalia has over six years of experience in financial, business, technology, climate, and health reporting, providing deep insights into Kenyan and global economic trends. He currently works as a business editor at TUKO.co.ke.
Members of Parliament (MPs) have recommended changes to the Finance Bill 2025 tax policy proposals.
Source: Twitter
TABLE OF CONTENTS
How much will Finance Bill 2025 collect?
The Finance Bill 2025 introduced a range of tax measures aimed at generating KSh 24 billion.
According to the National Assembly Committee on Finance and National Planning report, the money is part of the KSh 3.316 trillion ordinary revenue projected for the fiscal year 2025/26.
Earlier, Treasury Cabinet Secretary (CS) John Mbadi estimated revenue collections from the bill at KSh 30 billion.
The committee, led by Molo MP Kimani Kuria, recommended a review of the proposed tax measures that have cut the projected revenue by about KSh 6 billion.
Some of the tax policies proposed in the bill focused on enhancing revenue collection through administrative reforms and improved taxpayer compliance.
Which proposed tax measures are rejected?
However, the committee resolved to withdraw some proposals after listening to Kenyans and industry stakeholders during the public participation exercise.
These are:
1. Elimination of 15% corporate tax rate
The Finance Bill 2025 proposed amendments to eliminate the 15% corporate tax incentive granted to companies engaged in the local assembly of motor vehicles and the construction of at least 100 residential housing units.
The lawmakers withdrew the proposal, noting that removing the incentive will hurt the economy in terms of employment, undermine the promotion of local manufacturing and reduce housing efforts by the government.
2. Reclassification of goods from zero-rated to tax-exempt
The MPs agreed to reverse the proposal to reclassify some goods from zero-rated to tax-exempt, retaining their status. The goods included:
- Locally assembled and manufactured mobile phones
- Motorcycles under tariff heading 8711.60.00
- Electric bicycles
- Solar and lithium-ion batteries
- Electric buses under tariff heading 87.02
- Inputs or raw materials, whether locally purchased or imported, for the manufacture of animal feeds
- Bioethanol vapour (BEV) stoves are classified under HS Code 12.00
The report noted that these targeted goods were recently moved to zero-rated status under the Finance Act, 2023, to support local industries and reduce the cost of essential goods.
3. Proposal to limit carryforward of business losses to 5 years
The bill proposed to limit the carryforward of business losses to five years.
However, following challenges in verifying such losses incurred by taxpayers, the committee recommended amendments to allow for an additional five-year extension upon application.
4. Proposal to grant KRA sweeping access to personal data
Source: Facebook
The Finance Bill 2025 proposed amendments to Section 59A(1B) of the Tax Procedures Act and gives the Kenya Revenue Authority (KRA) access to personal data and trade secrets.
However, the committee dismissed the proposal as unnecessary and unconstitutional. It cited existing laws that can give the taxman access to personal data without infringing privacy rights.
What is Kenya's 2025/26 budget?
The report was tabled in parliament after Mbadi presented the KSh 4.29 trillion budget on Thursday, June 12.
Mbadi said the measures presented in the bill will aid in the collection of revenue to finance the budget for the year starting July 1, 2024.
He urged MPs to consider the proposals in the bill, which he described as friendly to the common mwananchi, and approve it.
Proofreading by Asher Omondi, copy editor at TUKO.co.ke.
Source: TUKO.co.ke
