President William Ruto's Cabinet on Tuesday, April 29, approved the Finance Bill 2025, introducing a raft of measures affecting several sectors of the economy.
The bill focuses primarily on enhancing efficiency, including addressing loopholes related to tax expenditures that have historically been exploited to siphon funds from public coffers, such as through inflated tax refund claims.
The proposed law also seeks to minimise tax-raising measures through a new legislative framework, shedding fears that the government would introduce new taxes in this year's Finance Bill.
Key provisions in the new bill include streamlining tax refund processes, sealing legal gaps that delay revenue collection, and reducing tax disputes by amending the Income Tax Act, Value Added Tax (VAT) Act, Excise Duty Act, and the Tax Procedures Act.
Notably, Finance Bill 2025 proposes critical changes to support small businesses by allowing them to fully deduct the cost of everyday tools and equipment in the year of purchase.
In the piece of legislation, retirees are also set to benefit immensely, as all gratuity payments, whether in public or private pension schemes, will now be fully tax-exempt.
According to the Cabinet, the reforms underpin the Bottom-Up Economic Transformation Agenda (BETA) and reinforce the government’s commitment to building a stronger, more inclusive economy.
During the meeting, the Cabinet members also approved the Public Finance Management (Amendment) Bill, 2024, to strengthen the country's emergency preparedness.
The bill, which is set to be submitted before Parliament for consideration, will allow county governments to establish County Emergency Funds.
The amendment aims to equip counties with the financial readiness to respond swiftly to future emergencies, thereby protecting lives, livelihoods, and critical infrastructure.
"This decision follows the serious gaps exposed by the 2023 El Niño rains and stems from extensive consultations and a directive issued at the 24th Ordinary Session of the Intergovernmental Budget and Economic Council (IBEC) in August 2024," read part of the cabinet dispatch.
The Cabinet's decision to approve this year's Cabinet comes almost a year after Kenyans took to the streets to protest the defunct Finance Bill 2024, which sought to introduce a raft of tax measures.
