Finance Bill 2025: More Punitive Than 2024? A Closer Look at Kenya’s Rising Tax Burden

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In 2024, Kenyans took to the streets in protest over a proposed Finance Bill that was deemed excessively punitive and regressive. The outcry, which led to over 60 deaths and widespread unrest, forced the government to backtrack on some of the most controversial tax proposals. However, one year later, the Finance Bill 2025 has reintroduced many of the same burdens—just repackaged and in some cases, deepened.

Despite being marketed as a reform-driven, administrative-efficiency tool, the 2025 bill has raised eyebrows for being stealthily harsher than its predecessor. It targets businesses, farmers, the informal sector, and even salaried workers with tighter tax rules, broader surveillance powers, and increased indirect costs. Here's how.


Key Provisions: What's New and Controversial

1. Fringe Benefit Tax Raised to 30%

One of the most alarming changes is the increase of Fringe Benefit Tax (FBT) from 9% to 30%. This tax applies to perks such as company cars, employer-paid rent, or low-interest loans. For professionals and employees, this means reduced take-home value. For employers, it could lead to slashing benefits altogether or passing on the cost to workers.

"This will strangle the middle class," tweeted one financial analyst. "If perks are taxed this heavily, they’ll cease to exist."

2. Limiting Loss Carry-Forward to Five Years

Startups and large capital-intensive businesses often operate at a loss in their early years. Previously, they could carry these losses forward indefinitely to reduce future tax burdens. The new cap of five years discourages long-term investment, especially in agriculture, infrastructure, and renewable energy sectors that typically take longer to turn profitable.

3. KRA’s New Surveillance Powers

Perhaps the most chilling provision is one that would give the Kenya Revenue Authority (KRA) the right to access individuals’ and businesses’ financial and mobile money data without requiring a court order. Civil society groups and lawmakers immediately raised red flags, calling it a direct threat to constitutional rights under Article 31 on privacy.

“Unchecked surveillance powers could lead to abuse, extortion, and profiling,” warned the Law Society of Kenya in a public statement.

Fortunately, as of mid-June, Parliament struck out this clause—but the fact that it was even proposed has shaken public trust.

4. “Pay Now, Argue Later” Tax Disputes

Under this bill, if you are assessed to owe tax—even wrongly—you must pay it first before challenging it in court or appealing through the tribunal. This is a clear reversal of natural justice principles and puts enormous financial strain on small businesses, particularly in cash-strapped times.


Agriculture, Digital, and Informal Sector Under Pressure

The bill targets previously zero-rated or exempt agricultural inputs—fertilizer, crop packaging, pesticides—by removing VAT exemptions. Farmers are already struggling with climate shocks and market volatility; this change could raise production costs by over 15%, impacting food prices across the country.

Meanwhile, excise tax expansion continues to affect mobile money transfers, streaming platforms, and digital lending apps—affecting both young digital entrepreneurs and low-income Kenyans who rely on mobile banking.

It’s Not Just About Taxes

While the bill is framed as a revenue-generation measure—especially in light of IMF-backed deficit caps and rising debt—it’s also a policy blueprint for how the state views its citizens: as taxpayers before being people. The Bill imposes austerity on citizens while the public sector remains bloated. Government travel allowances, bloated ministries, and unnecessary parastatal spending are still on the rise.

The contradiction hasn’t gone unnoticed. Many citizens online are calling the Finance Bill 2025 more dangerous than 2024—not because of upfront taxes, but because of stealth and sophistication. It quietly reshapes Kenya’s fiscal landscape in a way that’s harder to protest because it’s buried in technicalities.

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  • Kenya Association of Manufacturers (KAM) has warned the bill will increase operational costs and reduce Kenya’s regional competitiveness.

  • Okoa Uchumi Coalition says the bill unfairly targets low-income earners while the government fails to cut wasteful spending.

  • KEPSA raised concerns about trust and business confidence, especially with the data privacy issues.

There are positive changes too—like increasing the per diem cap from KSh 2,000 to KSh 10,000 and exempting pensions for those aged 65+—but these are seen as minor in comparison to the broader cost implications.

Is This Really the Best Path?

The Finance Bill 2025 shows the government is determined to widen its tax net and meet IMF targets. However, the manner in which it is doing so is raising alarm: the middle class is being squeezed, businesses are under siege, and the KRA is being empowered to operate like an intelligence agency.

If Kenya is to restore faith in governance, it must do better—by protecting privacy, prioritizing spending cuts over tax hikes, and ensuring that the burden of national development is shared equitably. Otherwise, the spirit of July 2024 may return, and the cycle of protest and repression could repeat.

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