Kenya’s Finance Bill Timeline Overview: 2003 to 2025

Over the past two decades, Kenya’s Finance Bills have shaped the country's economic journey, introducing bold reforms, responding to national crises, and supporting long-term goals like Vision 2030. From President Kibaki’s early tax reforms to the recent 2025 shift toward efficiency and relief, this post breaks down the key changes year by year, showing how each Finance Bill has impacted the lives of ordinary Kenyans, the business community, and the economy at large.

2003-2010: Early Finance Bills focused on economic stabilization and growth. Measures included broadening the tax base, improving tax compliance, and providing incentives for investment. This period saw significant reforms in VAT, excise duties, and income tax. The late president Mwai Kibaki is championed for these revolutions.

2010-2015: The Finance Bills during this period introduced measures to support Vision 2030, Kenya’s long-term development blueprint. Changes included tax incentives for the energy sector, increased excise duties on alcohol and tobacco, and adjustments in PAYE (Pay As You Earn) rates.

2015-2020: These years saw efforts to enhance revenue collection to fund infrastructure projects and social programs. Notable measures included the introduction of capital gains tax, expansion of VAT coverage, and adjustments in excise duties. There was also a focus on digital services tax and addressing base erosion and profit shifting (BEPS) by multinational companies.

2020-2023: The COVID-19 pandemic significantly impacted the economy, prompting Finance Bills to include measures for economic recovery. This included tax relief for individuals and businesses, introduction of minimum tax, digital services tax, and measures to support the healthcare sector. The 2023 Bill proposed increasing VAT on petroleum products, and raising the turnover tax rate, among other changes​ (Grant Thornton Kenya)​​.

2024/2025: The most recent Finance Bill aims to widen the tax base and enhance revenue collection further. Key proposals include the introduction of a motor vehicle tax, changes in VAT exemptions, and the implementation of a global minimum tax for multinational entities. The Bill also aims to streamline tax procedures and improve tax compliance​ (Bowmans)​​ (TripleOKlaw LLP)​​ (KPMG)​.

Kenya’s Finance Bill 2025/2026: A Shift Towards Efficiency and Relief

In response to the public outcry and protests over the 2024 Finance Bill, which led to significant unrest and loss of life, the Kenyan government has taken a more measured approach in the 2025 Finance Bill. The focus has shifted from introducing new taxes to enhancing tax administration and closing existing loopholes. 

Fiscal Strategy and Budget Overview

• No New Tax Increases: The government has refrained from introducing new taxes or increasing existing ones, particularly on employment income, to avoid further public discontent.
• Budget Deficit Target: The fiscal deficit is projected to be capped at 4.5% of GDP for the 2025/26 fiscal year, a reduction from the previous year's 5.1%. 

Key Tax Policy Changes

• Digital Economy Taxation: The Digital Service Tax (DST) has been replaced with a Significant Economic Presence Tax (SEPT), imposing a 6% tax on turnover for non-resident digital service providers. 
• Withholding Tax on Digital Marketplaces: A withholding tax of 5% for residents and 20% for non-residents has been introduced on income earned through digital platforms. 
• Pension Contributions: The tax-deductible limit for pension contributions has been increased from KES 20,000 to KES 30,000 per month, encouraging higher retirement savings. 
• VAT Registration Threshold: The threshold for VAT registration has been raised from KES 5 million to KES 8 million, exempting more small businesses from VAT obligations. 

Measures to Enhance Tax Compliance

• Access to Financial Data: The Kenya Revenue Authority (KRA) is proposed to be granted access to financial data of individuals and businesses to combat tax evasion, a move that has raised privacy concerns. 
• Advance Pricing Agreements: The introduction of Advance Pricing Agreements aims to provide certainty in transfer pricing for multinational enterprises operating in Kenya. 
• Environmental and Health Levies
• Eco Levy: An environmental levy has been proposed on certain manufactured goods, including electronics and plastic products, to address environmental concerns. 
• Excise Duty Adjustments: Excise duty on alcoholic beverages will now be based on alcohol content rather than volume, aligning taxation with health objectives. 

The 2025 Finance Bill reflects the government's attempt to balance fiscal responsibility with public sentiment, focusing on administrative efficiency and targeted reforms rather than broad-based tax increases.