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On June 26, 2025, President William Ruto formally signed the Finance Bill 2025 into law during a ceremony held at State House in Nairobi. Alongside the Finance Bill, he also assented to the Appropriations Bill and the Supplementary Appropriations Bill, effectively activating the financial and legal infrastructure required to implement Kenya’s KSh 4.2 trillion budget for the fiscal year 2025/26.
The Finance Act 2025 introduces a series of fiscal changes aimed at raising domestic revenue, streamlining tax administration, and promoting economic growth. The law amends various tax statutes, including the Income Tax Act, Value Added Tax Act, Excise Duty Act, and the Tax Procedures Act. It seeks to harmonize revenue collection mechanisms and reduce loopholes in tax compliance.
While some contentious provisions were dropped during the legislative review—such as the clause that would have granted the tax authority open access to personal financial data—many aspects of the bill remain controversial, especially regarding the burden it places on the working and middle-class populations.
-Tax Relief at Source: The law mandates employers to automatically apply eligible tax reliefs on behalf of employees, aiming to improve compliance and reduce manual error.
-Revised Allowances: The threshold for daily subsistence allowances exempt from tax has been raised to KSh 10,000 for private-sector employees.
-Telecom Investment Incentives: Tax exemptions on spectrum licenses and fiber infrastructure were introduced to support digital growth.
-VAT Revisions: The law introduces new VAT rules affecting e-commerce, fuel, and financial services, expected to widen the tax base.
With the Appropriations Bill also signed into law, the National Treasury is now authorized to withdraw up to KSh 1.88 trillion from the Consolidated Fund to finance core government operations and development projects. Additionally, various ministries and agencies have been allocated over KSh 672 billion in Appropriations-in-Aid, which allows for direct usage of internally generated revenue.
The combined laws enable full execution of the 2025/26 budget, which is structured around a projected KSh 4.2 trillion in total expenditure—focused heavily on infrastructure, debt repayment, health, education, and digital economy investment.
The passage of the Finance Bill 2025 has triggered a wave of public dissatisfaction across the country. Leading up to and following the presidential assent, protests were held in multiple counties, with demonstrators decrying the tax burden, lack of public participation, and perceived economic insensitivity by the administration. Despite these reactions, the President maintained that the bill is necessary to stabilize the economy and secure Kenya’s fiscal sovereignty.
While the Finance Act 2025 is now the law of the land, its implementation will unfold in a politically charged environment. The government has pledged to ensure accountability and fair enforcement, yet tensions between citizens and the state remain unresolved
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