Share this
Just a year after the Finance Bill 2024 triggered widespread protests and public outcry across Kenya, the Finance Bill 2025 has emerged as yet another flashpoint in the national conversation. The trauma of last year’s demonstrations—sparked by opaque policymaking, increased cost of living, and perceived disregard for public welfare—still lingers. Many Kenyans are now approaching this year’s proposals with heightened skepticism and sharper scrutiny.
This new bill, currently under parliamentary debate, outlines sweeping changes that directly affect both individuals and businesses. As observed in conversations led by policy commentators like @McKennaMK on X, there is growing consensus that the Finance Bill 2025 may further strain already struggling households and small enterprises—repeating the same patterns that ignited last year’s unrest.
Key Tax Proposals and Their Implications
The Finance Bill 2025 introduces several aggressive tax measures. Below is a breakdown of the most contentious proposals:
1. Digital Content Monetization Tax
Kenya’s growing community of digital creators now faces a 20% withholding tax on income earned from platforms such as YouTube, TikTok, blogs, and even cryptocurrency. A KES 10,000 brand deal, for example, would see KES 2,000 deducted and remitted to KRA—penalizing a sector many young Kenyans turned to after job losses during COVID-19.
2. Motor Vehicle Tax
A new annual tax of 2.5% of a car’s value, with a minimum of KES 5,000 and a maximum of KES 100,000, is set to be collected during insurance renewal. This tax, branded by many as punitive, revives memories of 2024’s controversial fuel levies and their disproportionate effect on the working class.
3. Eco Levy on Everyday Goods
The proposed environmental levy will apply to items like electronics, plastics, diapers, and sanitary pads, at rates ranging from KES 150 to KES 3,000 per kilogram. Critics argue that this will drive up the cost of living—once again, disproportionately affecting women and low-income families.
4. VAT on Bread and Sanitary Pads
Bread and sanitary pads, previously VAT-exempt or zero-rated, will now attract 16% VAT. This shift has reignited public fury, especially given that these essentials had been at the center of 2024’s cost-of-living protests.
5. Turnover Tax for Small Businesses
The threshold for Turnover Tax is being halved—from KES 1 million to KES 500,000 in annual sales—pulling more informal traders and small businesses into the tax bracket, despite prior promises to support MSMEs after 2024’s turmoil.
6. Withholding Tax on Farmers
Farmers will now lose 5% to 10% of their income when selling produce to cooperatives. Coming after a season of drought and inflation, this measure feels like a step backwards in agricultural policy.
7. Higher Rental Income Tax
Landlords earning between KES 1M and KES 20M annually will see their tax double—from 7.5% to 15% on gross rent. The likely downstream effect: higher rent for tenants at a time when urban housing affordability is already strained.
8. Advance Tax on Commercial Vehicles
The advance tax for matatus, buses, and trucks will more than double. This is expected to inflate transport and food distribution costs, compounding the inflationary pressures Kenyans faced during and after 2024.
9. Excise Duty on Betting and Alcohol
A 20% excise duty on betting stakes and alcohol appears intended to curb social vices, but critics warn it may simply push these activities underground—as happened when similar measures were introduced in 2024.
10. PAYE and Effective Tax Pressure
While PAYE rates remain unchanged, the cumulative burden of new taxes will erode real income and purchasing power, especially for the salaried middle class who were already squeezed by last year’s policies.
11. Taxation of Payments from Public Entities
Under the bill, income from public contracts becomes taxable when received, not when invoiced. This change shifts financial risk to suppliers, worsening cash flow problems—a key complaint raised during the 2024 Finance Bill protests.
12. Elimination of Tax Reliefs
Proposed removal of tax reliefs for education, housing, and investment savings has alarmed financial planners and the emerging middle class—many of whom feel this betrays last year’s government promises to reward long-term financial discipline.
13. Expanded Definition of “Royalties”
The definition of royalties now includes software subscriptions, digital licenses, and recurring digital payments, all attracting a 20% withholding tax. Startups and software-based businesses—already hurting from 2024’s tech-sector contractions—are likely to be further squeezed.
Legal Ambiguities and Constitutional Risks
Adding to public unease is the bill’s reference to the Repealed Provisional Collection of Taxes and Duties Act (Cap 415). This law previously allowed the government to begin collecting taxes from July 1—even before a Finance Bill had been formally passed. The High Court ruled this practice unconstitutional in 2024.
Yet, the 2025 bill seems to assume a July 1 implementation date, despite the legal precedent. If the KRA acts on this assumption, it may violate Article 210 of the Constitution, which requires tax to be imposed by an actual law—not just a proposal. This legal gray area could lead to court challenges, civil disobedience, or even a repeat of last year’s mass mobilizations.
A Critical Moment for Public Engagement
The Finance Bill 2024 taught Kenyans the power of collective action and informed protest. That legacy is not lost in 2025. Civil society groups, economists, and content creators are already mobilizing to unpack the bill’s implications, rally opposition where necessary, and demand a more transparent, people-centered budget process.
Whether this year’s bill will once again lead to demonstrations—or a more responsive policy revision—remains to be seen. But what’s clear is that Kenyans are watching more closely than ever.
