On June 19, 2025, Parliament passed the Finance Bill 2025 after intense debate and massive public interest.
The Bill, now awaiting President William Ruto’s signature to become law, carries amendments to key pieces of tax legislation, including the Income Tax Act, the Value Added Tax Act, the Excise Duty Act, the Tax Procedures Act, the Miscellaneous Fees and Levies Act, and the Stamp Duty Act.
The Bill, once it becomes law, is expected to greatly impact the life of the ordinary mwananchi trying to make ends meet, build a life, raise a family, and grow a hustle.
The Bill touches Kenyans’ everyday life including what they earn, spend, save, and how the government uses Kenyans’ taxes.
Business Today has scrutinised the Bill and how the looming changes will benefit Kenyans.
Here are some of the issues that were passed which could benefit Kenyans;
1. No tax on gratuity
Once the Bill is signed into law, there will be no more tax deductions on Kenyans’ gratuity, whether you were a teacher, police officer, or private worker. You now walk away with 100% of your retirement money.
2. Tax relief for building your own house
You no longer need to buy a house to get mortgage tax relief even if you build through a Sacco or personal loan.
If you’re building back home or in a plot somewhere, this saves you money and encourages self-built housing.
3. Bigger per diem
Once the Bill is signed into law, Kenyans can now get reimbursed more when on official trips without paying tax, up to Ksh10,000 from the current Ksh2,000. This will be useful for NGO staff, county officers, or anyone who travels for work.
4. Lower taxes on Crypto & digital assets
If you trade in cryptocurrency, NFTs, or earn online — your tax is now halved from 3 per cent to 1.5 per cent, encouraging youth and digital hustlers to thrive in the online economy.
5. Big tech like Netflix and Google now taxed
Foreign companies offering services to Kenyans will now be required topay VAT. This will encourage local digital companies to compete fairly, and Kenya earns revenue from foreign profits.
6. Companies can deduct sports investments
If a business builds a football pitch or sports facility, they can deduct that cost from taxes which encourages more community fields, youth centers, and sports hubs — especially in rural areas.
7. Clear tax terms for big companies (APAs)
Big firms can agree on tax arrangements with the Kenya Revenue Authority (KRA) for up to five years, which attracts stable investment and protects jobs.
8. Business Losses Can’t Be Carried Forever
Businesses must now recover losses within five years. This will keep companies accountable and stop long-term tax avoidance.
9. Government suppliers now face withholding tax
If you are supplying goods to government or selling scrap, you will now pay tax upfront.
10. Kenya matches EAC tariffs
Kenya’s excise rules now match other East African countries in a bid to make trade across the region easier for Kenyan products.
11. Employers must apply tax reliefs automatically
Kenyans do not have to claim tax reliefs manually — employers will now do it. This will mean more salary in your hands without filling forms or following up with KRA.
What Was Rejected
1. KRA can’t access your M-Pesa or bank without court order
This means your personal financial privacy is guaranteed since no random peeping into your accounts.
2. No new PAYE tax bands
This means your salary tax rates remain stable — no surprise increases.
3. Essentials still zero-rated
This means prices stay low for important items such as solar systems and locally manufactured items, supporting green energy and local manufacturing.
4. Corporate tax breaks for key sectors retained
This will see jobs in construction, manufacturing, and housing continue growing.
5. No extra tax on legal alcohol
This will prevents illegal brew problems and protects rural alcohol producers.
6. Digital companies must pay tax
This means no free ride for small foreign digital firms.
Read: 2025/26 Budget: Unravelling Key Sector Gains
>>> Mbadi Seeks to Rebuild Trust On Finance Bill Via Open Dialogue With Youth
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