The National Treasury has finally released the Finance Bill 2025, which proposes a raft of tax measures to be implemented by the government in the 2025/2026 fiscal year.
The bill shared by National Assembly's Finance Committee Chairperson, Kimani Kuria, on Wednesday, April 30, comes as a relief for several sectors of the economy, including the construction sector, as it proposes changes in the Export and Investment Promotion levy.
It introduces a significant reduction of the Export and Investment Promotion levy from 17.5 per cent to 5 per cent for several construction-related products.
The construction-related products include semi-finished goods made of iron or non-alloy steel, including bars and rods of iron or non-alloy steel.
The bill also proposes reforms in the Value Added Tax (VAT), as it introduces the shift of numerous goods and services from Zero-Rated to VAT-exempt status.
Goods that could be moved from zero-rated to VAT-exempt status include raw materials supplied to pharmaceutical manufacturers and sugarcane transportation from farms to milling factories.
The bill also includes provisions for locally assembled and manufactured mobile phones, electric bicycles, solar and lithium-ion batteries, and raw materials for animal feed production.
However, the bill specifies that if VAT-exempt or zero-rated goods are used in a manner deviating from their intended purpose, the taxpayer will be required to pay VAT on them.
Additionally, the legislation introduces a 25 per cent tax, or Ksh200 per kilogram, on imported adhesive plates, shoes, films, foil, tape, strips, and other flat shapes of plastics.
This 25 per cent tax does not apply to commodities imported from East African Community (EAC) Partner States, provided they meet the EAC rules of origin.
The bill also proposes extending the Kenya Revenue Authority's (KRA) period for reviewing VAT refunds from the current 90 days to 120 days.
Meanwhile, President Ruto's Cabinet approved the Finance Bill 2025 on Wednesday, April 30, clearing the way for parliamentary deliberation on the proposed law.
Ruto, while addressing Kenyans during the Labour Day Celebrations at the Uhuru Gardens in Nairobi, on Thursday, May 1, said this year's Finance Bill was carefully crafted to stimulate economic growth.
He also noted that the bill's provisions were designed to offer targeted relief to both businesses and workers, and to support the spirit of enterprise and productivity.
