President William Ruto has announced that the Finance Bill 2025, approved by the Cabinet on April 29, aims to stimulate economic growth and provide significant benefits to Kenyans. The bill introduces measures designed to enhance efficiency, competitiveness, and expand opportunities across various sectors.
Key provisions of the bill include:
- Tax-Free Pensions and Gratuities: Starting from the next financial year, pensions and gratuity payments for both public and private sector workers will be exempt from taxation.
- Increased Pension Contributions Exemption: The exemption for pension contributions has been raised from KSh20,000 to KSh30,000 per month.
- Tax-Free Per Diem Allowances: Privately employed individuals will benefit from higher tax-free per diem allowances, allowing them to retain more of their earnings.
- Support for Small Businesses: The bill increases the VAT registration threshold from KSh5 million to KSh8 million, reducing the tax burden on many small businesses. Additionally, farmers and small businesses with a turnover below KSh1 million will be exempt from the electronic Tax Invoice Management System (eTIMS).
- Protection for Local Farmers: The bill imposes excise duty on imported table eggs, onions, and potatoes to protect local farmers from unfair competition.
- Digital Economy Boost: The bill introduces a 13% digital service tax (DST) on digital platforms, aiming to boost the digital economy.
President Ruto emphasized that the Finance Bill 2025 is crafted to support the spirit of enterprise and productivity in Kenya, ensuring that economic growth benefits all citizens.
