KRA's bid for unrestricted data access rejected as Finance bill 2025 passes

The National Assembly has passed the Finance Bill 2025, introducing significant changes to the country's tax landscape.

After thorough deliberation, lawmakers rejected several contentious proposals and made crucial amendments to protect taxpayers' rights and promote economic growth.

One notable rejection was the Kenya Revenue Authority's (KRA) bid for unrestricted access to taxpayers' personal and financial data. Citing Article 31(c) and (d) of the Constitution, which guarantees the right to privacy, the Finance Committee rejected this proposal.

 Instead, KRA will continue to access data with a judicial warrant, ensuring due process and protecting citizens' privacy.

Lawmakers also rejected the proposed expansion of Pay As You Earn (PAYE) tax bands, which would have introduced new rates and granted the Treasury Cabinet Secretary power to adjust rates for inflation.

This move provides relief to individuals and ensures predictable tax obligations.

The National Assembly retained the 15 percent corporate tax rate for motor vehicle assembly and construction of residential housing units. This decision maintains incentives for businesses in these sectors, promoting investment and economic growth.

The Sh 500 excise duty per liter on Extra Neutral Alcohol (ENA) for licensed manufacturers was retained, providing relief to the industry. 

This move aims to support manufacturers and promote economic activity.

Lawmakers supported full tax exemption for pension payments, whether received as lump sums or installments.

This clarification of existing provisions provides certainty for retirees and promotes financial security.

The definition of SEPT was expanded to include revenue from websites and electronic networks beyond digital marketplaces.

The proposed Sh 5 million revenue threshold was opposed due to potential revenue leakage and enforcement challenges.

The amended Finance Bill 2025 is expected to raise Sh 4 billion and will proceed to President William Ruto for assent. Once enacted, it will guide tax policies and revenue collection measures for the 2025/2026 financial year.