Kenyan President William Ruto has signed the Finance Bill 2025 into law, aiming to streamline revenue collection and foster economic growth in the country.
The new law comes with several amendments to the previous one which generated controversy and widespread protest last year. These amendments cover key areas including Income Tax, VAT, and Excise Duty.
Also, it mandates all employers to automatically apply all tax reliefs, deductions, and exemptions for employees, easing their tax burden. The bill fully exempts pension and retirement gratuity payments from tax, providing relief for retirees.
Additionally, Kenyan start-ups will enjoy a reduced corporate tax rate of 15% in their first three years of operation, creating a clear path for investors and economic growth.
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The 2025 Finance Act also repeals the Digital Assets Tax, replacing it with a 5% excise duty on transaction fees for virtual asset providers while slashing Capital Gains Tax to 5% for high-end investors.
Furthermore, under the new law, the government can access KSh 1.88 trillion from the Consolidated Fund for the 2025/2026 financial year, with an additional KSh 671.99 billion from ministries, departments, and agencies’ internally generated revenues.
However, controversial clauses such as unrestricted access for the Kenya Revenue Authority (KRA) to personal data, were rejected by Parliament following public outcry, reflecting a more responsive legislative process this year.
