Members of Parliament (MPs) have recommended changes to the Finance Bill 2025 tax policy proposals.

The Finance Bill 2025 introduced a range of tax measures aimed at generating KSh 24 billion.

According to the National Assembly Committee on Finance and National Planning report, the money is part of the KSh 3.316 trillion ordinary revenue projected for the fiscal year 2025/26.

Earlier, Treasury Cabinet Secretary (CS) John Mbadi estimated revenue collections from the bill at KSh 30 billion.

The committee, led by Molo MP Kimani Kuria, recommended a review of the proposed tax measures that have cut the projected revenue by about KSh 6 billion.

Some of the tax policies proposed in the bill focused on enhancing revenue collection through administrative reforms and improved taxpayer compliance.

However, the committee resolved to withdraw some proposals after listening to Kenyans and industry stakeholders during the public participation exercise.

These are:

The Finance Bill 2025 proposed amendments to eliminate the 15% corporate tax incentive granted to companies engaged in the local assembly of motor vehicles and the construction of at least 100 residential housing units.

The lawmakers withdrew the proposal, noting that removing the incentive will hurt the economy in terms of employment, undermine the promotion of local manufacturing and reduce housing efforts by the government.

The MPs agreed to reverse the proposal to reclassify some goods from zero-rated to tax-exempt, retaining their status. The goods included:

The report noted that these targeted goods were recently moved to zero-rated status under the Finance Act, 2023, to support local industries and reduce the cost of essential goods.

The bill proposed to limit the carryforward of business losses to five years.

However, following challenges in verifying such losses incurred by taxpayers, the committee recommended amendments to allow for an additional extension of up to five years, upon application.

The Finance Bill 2025 proposed amendments to Section 59A(1B) of the Tax Procedures Act and gives the Kenya Revenue Authority (KRA) access to personal data and trade secrets.

However, the committee dismissed the proposal as unnecessary and unconstitutional. It cited existing laws that can give the taxman access to personal data without infringing privacy rights.

More to follow...

Source: TUKO.co.ke