Everything You Need To Know About The Finance Bill 2025: Priority On Revenue Collection Over The Welfare Of The Ordinary Kenyan

Before we dissect the madness stitched into the Finance Bill 2025, let us pause and salute the fiery spirit of Kenya’s Gen Z—the generation that, in 2024, shook the nation out of its slumber and reminded the powers that be that silence is not consent. It was their courage, unfiltered rage, and clarity of purpose that exposed the rot in the Finance Bill 2024.

And now, barely a year later, the government has returned, not with remorse, but with a recycled monstrosity wearing a new name. The Finance Bill 2025 is not a deviation—it is a sequel. Same script. Same characters. Just more cunning clauses and sugar-coated sabotage. It is proof that the system learned nothing… except how to become more sophisticated in its oppression.

In the amphitheatre of Kenya’s fiscal policy, the Finance Bill 2025 takes the spotlight—not as a reformative blueprint, but as a theatrical display of economic absurdity. What should be a strategic instrument for national development instead unfolds as a tragicomedy of punitive taxation and misplaced priorities. We are not in an economy flowing with opportunity and equity, but in a tax regime where even the basic essentials are fair game for revenue extraction, while the real fiscal sweeteners are selectively reserved for a privileged few.

The Kenya Revenue Authority (KRA), ever the vigilant guardian of the nation’s coffers, has been granted the magical ability to peer into our financial souls. With the proposed amendments, KRA can now access our bank and M-Pesa details without the pesky hindrance of a court order. Privacy, it seems, is so last season.

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Employers, once benevolent providers of staff loans and benefits, now face a 30% fringe benefit tax, up from a modest 9%. It’s as if the government is saying, “Why help your employees when you can help us instead?”

The removal of VAT exemptions on locally assembled mobile phones is a stroke of genius. After all, who needs affordable communication in the digital age? Let’s make connectivity a luxury again.

For the high-flying government officials and corporate executives, the tax-free per diem allowance has been generously increased from Sh2,000 to Sh10,000. Because nothing says “public service” like lavish travel allowances.

Streaming services, online radio, e-learning platforms, and software updates will now attract a 16% VAT. In a world increasingly reliant on digital platforms, this move ensures that only the privileged can afford knowledge and entertainment.

The reduction of the Export & Investment Promotion Levy from 17.5% to 5% for certain construction products is a subtle nod to the construction industry’s woes. A small consolation prize in the grand scheme of fiscal tightening.

Zero-rating on essential items like drugs, animal feed, electric buses, and solar batteries is being removed. It’s a bold strategy to ensure that healthcare, agriculture, and renewable energy remain exclusive domains.

KRA’s tax refund processing time is being extended from 90 to 120 days, and the audit timeline from 120 to 180 days. Because who doesn’t enjoy waiting longer for their hard-earned money?

The bill leans heavily towards sealing loopholes in tax administration and collection rather than introducing new taxes or increasing tax rates. It’s a masterclass in squeezing every last shilling from the populace without appearing overtly greedy.

The silent empowerment of KRA to access taxpayer data by amending the Tax Procedure Act is a testament to the government’s commitment to transparency. Or perhaps, a lack thereof.

The move from zero-rated to VAT-exempt status for various goods and services is a subtle way of increasing consumer prices without the backlash of direct taxation.

The proposal to tax VAT-exempt or zero-rated goods used for unintended purposes raises questions about intent and misuse. Who decides what’s unintended? A philosophical conundrum for the ages.

Extending VAT refund timelines could strain working capital, especially for exporters and capital-intensive sectors. But hey, patience is a virtue, right?

The increase in the tax-free per diem threshold offers relief to employees incurring higher costs when traveling for work. A rare glimmer of hope in an otherwise bleak fiscal landscape.

Including gratuity in the list of income tax-exempt items provides some solace to retiring or terminating employees. A parting gift, if you will.

Exempting the transfer of property from an individual to a company in which the individual is the sole shareholder from capital gains tax is a nod to the entrepreneurial spirit. Or perhaps, a loophole for the savvy.

The introduction of an annual motor vehicle tax based on engine size and value adds another layer of expense to car ownership. Because fuel, insurance, and maintenance weren’t burdensome enough.

The Eco Levy, targeting phones, laptops, fridges, batteries, TVs, and more, ensures that even everyday items contribute to the national kitty. A tax on convenience and modernity.

Removing VAT zero-rating for inputs like animal feeds and sugarcane transport is a surefire way to increase food prices. A strategic move to ensure that hunger remains a pressing issue.

Taxing solar and lithium-ion batteries by moving them from zero-rated to VAT-exempt status makes renewable energy less affordable. A step backward in the fight against climate change.

The Finance Bill 2025 is more than tax reform; it’s a quiet economic war on the common Mwananchi. It makes food, medicine, tech, and transport more expensive while hiding behind technical tax terms.

The proposal to tax VAT-exempt or zero-rated goods used for unintended purposes seeks to reduce revenue loss from misuse of tax incentives. However, it raises questions about how intent and misuse will be determined.

The increase in the tax-free per diem threshold aligns private sector treatment with the public sector, offering relief to employees incurring higher costs when traveling for work.

Including gratuity in the list of income tax-exempt items offers tax relief to retiring or terminating employees, providing a financial cushion during transitions.

Exempting the transfer of property from an individual to a company in which the individual is the sole shareholder from capital gains tax encourages business formalization and growth.

The introduction of an annual motor vehicle tax based on engine size and value adds another layer of expense to car ownership, potentially discouraging vehicle ownership among the middle class.

The Eco Levy, targeting phones, laptops, fridges, batteries, TVs, and more, ensures that even everyday items contribute to the national kitty, potentially increasing the cost of living.

Removing VAT zero-rating for inputs like animal feeds and sugarcane transport is likely to increase food prices, affecting the affordability of basic commodities.

Taxing solar and lithium-ion batteries by moving them from zero-rated to VAT-exempt status makes renewable energy less affordable, hindering efforts to promote clean energy solutions.

Read Also: Businessman Who Evaded Taxes Worth Ksh 16 Million Charged

The Finance Bill 2025 is more than tax reform; it’s a quiet economic war on the common Mwananchi. It makes food, medicine, tech, and transport more expensive while hiding behind technical tax terms.

The proposal to tax VAT-exempt or zero-rated goods used for unintended purposes seeks to reduce revenue loss from misuse of tax incentives. However, it raises questions about how intent and misuse will be determined.

The increase in the tax-free per diem threshold aligns private sector treatment with the public sector, offering relief to employees incurring higher costs when traveling for work.

Including gratuity in the list of income tax-exempt items offers tax relief to retiring or terminating employees, providing a financial cushion during transitions.

Exempting the transfer of property from an individual to a company in which the individual is the sole shareholder from capital gains tax encourages business formalization and growth.

The introduction of an annual motor vehicle tax based on engine size and value adds another layer of expense to car ownership, potentially discouraging vehicle ownership among the middle class.

The Eco Levy, targeting phones, laptops, fridges, batteries, TVs, and more, ensures that even everyday items contribute to the national kitty, potentially increasing the cost of living.

Removing VAT zero-rating for inputs like animal feeds and sugarcane transport is likely to increase food prices, affecting the affordability of basic commodities.

Taxing solar and lithium-ion batteries by moving them from zero-rated to VAT-exempt status makes renewable energy less affordable, hindering efforts to promote clean energy solutions.

The Finance Bill 2025 is more than tax reform; it’s a quiet economic war on the common Mwananchi. It makes food, medicine, tech, and transport more expensive while hiding behind technical tax terms.

Summary of Key Tax Changes:

Fringe Benefit Tax: Increased from 9% to 30%.

Per Diem Allowance: Tax-free threshold raised from Sh2,000 to Sh10,000.

VAT on Digital Services: 16% VAT introduced on streaming, e-learning, and software updates.

Motor Vehicle Tax: Annual tax based on engine size and value introduced.

Eco Levy: Imposed on imported finished products contributing to e-waste.

VAT Zero-Rating Removal: Affects drugs, animal feed, electric buses, and solar batteries.

KRA Data Access: KRA can access bank and M-Pesa details without a court order.

VAT Refund Processing: Extended from 90 to 120 days; audit timeline from 120 to 180 days.

Therefore, the Finance Bill 2025 appears to prioritize revenue collection over the welfare of the common citizen. While some measures aim to streamline tax administration, the overall impact seems to burden the average Kenyan further. It is imperative for stakeholders to critically assess and engage with the bill to ensure that fiscal policies promote inclusive growth and do not exacerbate existing inequalities.

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