Finance Bill 2025: Key Tax Changes Introduced
The National Treasury has officially released the Finance Bill 2025, unveiling a series of tax reforms aimed at driving economic growth in the 2025/2026 fiscal year. The proposed measures, shared by National Assembly Finance Committee Chairperson Kimani Kuria on April 30, introduce both tax relief and increased levies, targeting multiple sectors of the economy.
One of the key highlights is the reduction of the Export and Investment Promotion Levy from 17.5% to 5% on selected construction-related products. These include semi-finished goods made of iron or non-alloy steel such as bars and rods—offering a potential boost to the local construction industry.
The bill also outlines major reforms in the Value Added Tax (VAT) framework. Several goods and services currently enjoying zero-rated status could be shifted to VAT-exempt status. This includes raw materials supplied to pharmaceutical manufacturers and the transportation of sugarcane from farms to mills.
New exemptions under the bill cover a range of locally assembled or manufactured items, such as mobile phones, electric bicycles, solar and lithium-ion batteries, and raw materials for animal feed production. However, misuse of VAT-exempt or zero-rated goods for unintended purposes will attract VAT penalties.
Additionally, the Finance Bill proposes a 25% import tax—or Ksh200 per kilogram, whichever is higher—on certain plastic products including adhesive plates, shoes, films, foils, tapes, strips, and other flat plastic shapes. Notably, this levy excludes goods imported from East African Community (EAC) Partner States, provided they comply with EAC rules of origin.
The bill also seeks to extend the Kenya Revenue Authority’s (KRA) VAT refund review period from 90 days to 120 days, potentially impacting cash flow for businesses awaiting reimbursement.
President William Ruto’s Cabinet approved the bill on April 30, signaling support from the executive arm. Speaking during Labour Day celebrations on May 1 at Uhuru Gardens, President Ruto emphasized that the Finance Bill 2025 was designed to stimulate economic growth, empower businesses, and enhance productivity across key sectors.
The bill will now undergo debate in Parliament, where lawmakers are expected to deliberate its provisions before adoption.
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Finance Bill 2025: Key Tax Changes Introduced