Parliament Passes Finance Bill 2025 with Key Taxpayer Reliefs
Additional approvals included a tax exemption on all pension payouts and a broadened definition of Significant Economic Presence Tax (SEPT).
A session of the National Assembly. Photo/National Assembly.
By Robert Assad
The National Assembly has passed the Finance Bill, 2025, introducing taxpayer-friendly amendments and rejecting several controversial proposals. The Bill now awaits presidential assent.
MPs retained zero-rated tax status for locally assembled mobile phones, motorcycles, electric bicycles, solar batteries, electric buses, animal feed inputs, and bioethanol vapour stoves. They also maintained the Sh500 excise duty per litre on Extra Neutral Alcohol (ENA) for licensed spirit makers.
Lawmakers rejected proposals to expand PAYE tax bands and denied the Treasury Cabinet Secretary power to adjust rates based on inflation. They also blocked a bid to reclassify certain goods from zero-rated to exempt, and scrapped the proposed elimination of tax incentives for companies building at least 100 housing units or assembling motor vehicles.
A key win for privacy advocates came as Parliament removed a clause that would have given the Kenya Revenue Authority (KRA) unrestricted access to taxpayer data, citing constitutional rights.
The Bill is projected to raise Sh24 billion, significantly lower than past finance laws. Finance Committee Chair Kimani Kuria noted this is the lowest revenue projection in the last three years.
Additional approvals included a tax exemption on all pension payouts and a broadened definition of Significant Economic Presence Tax (SEPT). However, MPs rejected a Sh5 million revenue threshold, warning it could weaken KRA enforcement.
The Bill forms part of the broader Sh3.316 trillion ordinary revenue target for the 2025/26 budget.
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