President William Ruto has officially signed the Finance Bill 2025, with the new law largely keeping to the promise of minimising additional taxes to Kenyans.
- •The bill includes amendments to various laws relating to taxes including the income tax, the excise duty act, the value added tax, the tax procedures act, miscellaneous fees and levies act and the stamp duty act.
- •It has kept low on new taxation measures other than some areas which largely came from the National Treasury or others that came through the public participation process.
- •The President also signed the Supplementary Appropriation (3) Bill, which is the last of the supplementary appropriations for the current Financial year, and the Appropriations Bill for the next financial year.
“When it comes to the incentives to promote telecommunication sector, because after public participation, the telecommunication industry asked the committee to ensure that investment allowance deduction for purchase of spectrum license or a right of fiber optic issued by a telco operator is one of the exemptions granted. It is hoped that this is going to be an incentive and it is going to improve the telecommunication industry,” Ruto said.
The Finance Act 2025 introduces a 5% excise levy on betting and gaming deposits as a tax measure to curb gambling addiction and its associated social costs. The excise duty will be made when one transfers money to the betting company wallet, as opposed to the previous tax regime where the duty was due when one placed a bet.
The imposition of a 10% fee on virtual asset services signals the government’s increasing attention to the digital economy, alongside efforts to regulate and derive value from emerging financial technologies.
By mandating the automatic application of employee tax reliefs and exemptions, the legislation seeks to ease the tax burden on individual income earners. This measure is expected to simplify the tax process, increase disposable income, potentially stimulating domestic consumption, and improving the overall quality of life for Kenyans.
Further relief for retirees comes with the proposed exemption of gratuity payments and pension scheme allowances from taxation, acknowledging the need for financial security in post-employment years.
The exemption of inputs for mosquito repellents aims to support the health sector, particularly in malaria-prone areas. Additionally, exemptions related to the local packaging of tea are set to strengthen the agricultural and manufacturing industries. These changes are anticipated to reduce production costs, encourage local value addition, and enhance competitiveness in both domestic and export markets.
The Appropriation Bills
The new money is largely in the security sector, the education sector and the Inua Jamii cash program which is largely being regularized. It also includes budgetary allocations to the Teachers’ Service Commission to cater for shortfall in personal personnel. Other provisions include KSh 1.6 billion for hosting of CHAN, and a similar amount for the health sector.
The Appropriations Act for the next financial year largely speaks to the policies of the national government with respect to the financing of various sectors.
It allocates KSh 10.2 billion to the agriculture value chain development projects, KSh 1.5 billion for sugar sector reform, a new injection of KSh 8 billion to support the fertiliser subsidy, and KSh 4 billion for coffee debt waiver.
It also includes Ksh17.3 billion going to group of fund for HIV, Malaria and TB. There is Ksh13.1 billion which goes to primary healthcare and 8 billion for emergency chronic and critical illness fund. UHC healthcare workers are going to get Ksh6.2 billion for transfer of their their payrolls to counties.
The main appropriation bill also grants some Ksh4 billion to cater for internship programs for doctors and Ksh1.3 billion for the construction and equipping of cancer centers across specified counties.
The education sector also gets a good share of Ksh658.4 billion, KSh 387bn of which is going to teacher resource management including their renumeration promotion and recruitment of intern teachers KSh 58.9 billion goes to free primary and day secondary education while KSh 29 billion is for junior secondary school funding.
The university funding gets KSh 41.5 billion in the next financial year while the national examinations and assessment and the school feeding program get KSh 6 billion and KSh 3 billion each.
