As the Finance Bill 2025 moves into its final consideration phase, the National Assembly’s Departmental Committee on Finance and National Planning has intensified consultations with key government agencies.
These high-level engagements come in the wake of public participation exercises on both the Finance Bill and the Virtual Asset Service Providers Bill.
The Committee, chaired by Hon. Kuria Kimani, is now interrogating policy proposals with implementing agencies to address concerns raised by stakeholders and citizens during public submissions.
The Finance Bill 2025 seeks to amend several tax and duty laws, while the Virtual Asset Service Providers Bill proposes a regulatory framework for digital asset services.
The Committee has already held meetings with officials from the State Departments for Tourism, Agriculture, and Sports, as well as the Kenya Revenue Authority (KRA).
During the sessions, lawmakers sought clarifications and policy justifications, while departmental representatives made submissions urging adjustments to key provisions in the proposed laws.
Principal Secretary for Tourism, Mr. John Ololtuaa, called on the Committee to preserve existing VAT exemptions for the tourism sector as provided under VAT Act Cap 476.
He emphasized that these incentives are critical to maintaining Kenya’s position as a leading global tourism destination.
“This measure will ensure the sustained growth of a resilient, competitive, and inclusive tourism sector in Kenya,” PS Ololtuaa told the Committee.
He also pushed for additional incentives for sustainable tourism investments to promote eco-friendly development and long-term competitiveness.
Principal Secretary for Agriculture, Dr. Paul Ronoh, presented a detailed case for revising several tax proposals to support agricultural productivity.
He expressed concern over the reclassification of agricultural inputs from zero-rated to exempt under recent VAT changes, warning this could lead to increased production costs for farmers.
“This burden will then be transferred to farmers, ultimately affecting product competitiveness,” he said.
Dr. Ronoh proposed amendments to ensure fertilizers, micronutrients, bio-stimulants, and pest control inputs remain zero-rated.
He also urged the Committee to reclassify tea as a food item to attract zero VAT and proposed increased import duties on bulk and packaged tea imports to promote local value addition.
“We must protect our farmers from unfair competition while encouraging local processing,” PS Ronoh noted.
During engagements with the KRA, Committee members pressed for clarity on contentious clauses, including a proposed gratuity gains tax relief and a provision under Clause 52 that would grant KRA access to taxpayers’ data to enhance compliance.
“While it is important to enhance tax compliance, this provision would be in breach of Article 31 of the Kenyan Constitution, which guarantees the right to privacy,” said Hon. (Dr.) John Ariko (Turkana South).
Deputy Commissioner Maurice Oray clarified that the gratuity tax relief provision aims to align retirement benefits for all employees, ensuring fairness between pension and gratuity payouts.
Committee members, however, voiced concerns over frequent, abrupt tax amendments that lack proper impact assessments, arguing they lead to instability and confusion in the business environment.
“Lack of certainty, particularly in the shift from zero-rating to exempt status, is causing a lot of anxiety among taxpayers,” observed Hon. Joseph Oyula (Butula).
Chairperson Hon. Kuria Kimani reiterated the Committee’s commitment to ensuring that tax laws go beyond revenue collection to support long-term economic growth.
“We want the Finance Bill to serve as a policy tool for job creation and value addition, especially in agriculture and manufacturing,” said Hon. Kimani.
The Committee is expected to meet representatives from the National Treasury and the Ministry of Trade and Industry before finalizing its report.
A formal report is scheduled to be tabled in Parliament later this week, setting the stage for debate and possible amendments to the Finance Bill 2025.
