Treasury CS John Mbadi. Photo | courtesy.
The National Treasury has unveiled a list of controversial proposals in the Finance Bill 2025 that could have implications for individual privacy, digital content consumers, employers, and businesses in Kenya.
One of the most contentious proposals seeks to grant the Kenya Revenue Authority (KRA) access to private customer data, including bank and M-Pesa account details, without the need for a court order.
If passed, the move would strip away current legal protections, raising concerns over data privacy and state surveillance.
In a move likely to rattle employers, the Treasury is also proposing a sharp increase in the fringe benefit tax from 9 percent to 3 percent to align it with the corporate tax rate.
The change is expected to discourage companies from offering staff loans and other non-cash benefits, potentially impacting employee welfare packages.
Another key proposal would extend tax refund processing timelines from the current 90 days to 120 days, while tax audit periods would increase from 120 to 180 days.
The extended timelines could would bring cash flow problems for taxpayers awaiting refunds.
The bill also seeks to overhaul the treatment of travel allowances, raising the tax-free per diem from Sh2,000 to Sh10,000. While the change may benefit senior government officials and corporate executives, it is expected to widen income disparities.
On the digital front, the government is targeting the growing online economy by proposing a 16 percent value-added tax (VAT) on internet-based services such as streaming TV, online radio, e-learning platforms, digital music, films, and software updates.
The measure is likely to push up the cost of digital content and services for consumers.
In the manufacturing and export sectors, the Treasury is proposing a reduction of the Export and Investment Promotion Levy from 17.5 percent to 5 percent for select construction products, including semi-finished iron and steel.
This is aimed at lowering input costs and boosting industrial activity.
However, the bill also suggests removing zero-rating on essential goods such as medicine, animal feed, electric buses, and solar batteries.
The move could drive up the cost of living by making basic goods more expensive.
In a potentially taxpayer-friendly measure, the Finance Bill 2025 also proposes to give the Treasury Cabinet Secretary powers to waive penalties or interest arising from delays or errors in the electronic tax system, including duplicated penalties.
