Kenya - The Africa Tax Review

Kenya’s Parliament has officially passed the 2025 Finance Bill, setting the stage for President William Ruto’s assent. The legislation, aimed at increasing domestic revenue collection, has sparked significant attention both for its tax compliance targets and for the withdrawal of a contentious proposal involving access to taxpayer data. Kenya Approves 2025 Finance Law: Data Access Proposal Struck Out A major talking point during deliberations was the Kenya Revenue Authority's (KRA) attempt to secure unrestricted access to taxpayers' financial information. The move drew sharp criticism from civil rights groups, opposition figures, and legal experts over potential breaches of privacy and constitutional protections. Responding to the public backlash, the parliamentary finance committee rejected the proposal earlier in the week. Lawmakers ultimately agreed that existing legal provisions already allow KRA to obtain financial records—so long as court approval is granted. Tax Compliance Takes Priority Despite the data access controversy, the broader thrust of the Finance Act remains clear: strengthening tax enforcement and improving compliance. The law is expected to help generate an additional KSh 30 billion (approximately $233 million), addressing a growing budget deficit without introducing sweeping new tax increases. Finance Minister John Mbadi, who presented the 2025/26 budget to Parliament, reiterated that boosting revenue without destabilizing the economy is a central policy priority. The proposed KSh 4.29 trillion ($33 billion) budget relies heavily on improving tax administration. Rwanda Introduces Sweeping Tax Reforms for 2025/26 Avoiding Last Year’s Mistakes Observers say the government is walking a fine line this fiscal year, wary of the backlash that followed the 2024 Finance Bill. Last year’s tax proposals sparked nationwide protests, resulting in over 60 deaths and a partial rollback of the planned KSh 346 billion in new tax measures. By narrowing its focus to enforcement and compliance rather than broad tax hikes, the 2025 law is seen as a more measured approach to domestic revenue mobilization. Next Steps: Presidential Assent With legislative approval secured, the bill now moves to President Ruto’s desk. His assent would make the Finance Act law and allow its provisions to take effect at the start of the 2025/26 fiscal year on July 1. Analysts: Compliance-Based Strategy a Safer Bet Tax experts commenting on the development noted that while the KRA’s push for expanded access to taxpayer data was ambitious, the retreat from the proposal likely preserved public trust and safeguarded constitutional norms. They also emphasized that a strategy focused on tightening existing loopholes, enhancing audits, and encouraging voluntary compliance could deliver long-term revenue growth without inflaming social tensions. Fiscal Tightrope for Kenya Kenya’s 2025 Finance Law reflects a delicate balancing act: increasing revenue while maintaining taxpayer confidence and respecting civil liberties. The coming fiscal year will test the success of this strategy, particularly in how it translates into real gains for the national treasury. As Kenya navigates fiscal pressures and public sentiment, this year's finance framework may serve as a model for other African economies pursuing compliance-driven tax reform.

Kenya Approves 2025 Finance Law with Focus on Tax Compliance

June 23, 2025June 23, 2025 - by Jeremiah Amosu - Leave a Comment

Kenya’s Parliament has officially passed the 2025 Finance Bill, setting the stage for President William Ruto’s assent. The legislation, aimed at increasing domestic revenue collection, has sparked significant attention both …

EASTERN AFRICA

World Bank Recommends Carbon Tax on Fuels to Boost Kenya’s Revenue and Climate Goals

May 31, 2025June 11, 2025 - by Jeremiah Amosu - Leave a Comment

World Bank Recommends Carbon Tax on Fuels to Boost Kenya’s Revenue and Climate Goals. The World Bank is advising the Kenyan government to implement a carbon tax on imported fuels …

EASTERN AFRICA

Real Estate Sector in Kenya Raises Tax Concerns Over Finance Bill 2025

May 29, 2025May 29, 2025 - by Jeremiah Amosu - Leave a Comment

Stakeholders warn new tax proposals may hurt housing affordability and investor confidence Real Estate Sector in Kenya Raises Tax Concerns Over Finance Bill 2025. A coalition of real estate professionals …

FEATURED

Africa Tax Review: Key Developments in Week 6 of 2025

April 14, 2025April 14, 2025 - by Olatunji Abdulrazaq - Leave a Comment

Africa Tax Review: Key Developments in Week 6 of 2025. As African governments continue to pursue fiscal consolidation, stimulate growth, and broaden their tax bases, Week 6 of 2025 (February …

EASTERN AFRICA

Kenya Grants Ksh 140 Billion Tax Amnesty to Ease Compliance Burden

March 3, 2025March 3, 2025 - by Jeremiah Amosu - Leave a Comment

The Kenya Revenue Authority (KRA) has announced a significant tax relief under its ongoing Tax Amnesty Program, waiving Ksh 140 billion in penalties, interest, and fines. This initiative is aimed …

British American Tobacco Kenya (BAT Kenya) has denied claims of financial discrepancies amounting to KSh 9.6 billion (US$ 93 million) following a recent investigative report that scrutinized the company’s tax records. The report, titled Missing Millions: A Cross-Examination of British American Tobacco Kenya’s Tax Bill, was published by The Investigative Desk in collaboration with the Tobacco Control Research Group (TCRG) and Tax Justice Network Africa (TJNA). According to the findings, BAT Kenya may have underreported revenue between 2017 and 2018, potentially leading to a tax shortfall of approximately US$ 28 million. Allegations of Tax Discrepancies The report is based on an in-depth analysis of BAT Kenya’s financial disclosures over six years. Researchers cross-examined the company’s annual reports with production records submitted to the Kenya Revenue Authority (KRA), internal government documents, and market data on cigarette consumption and pricing. Investigators allege a gap of KSh 9.6 billion between BAT Kenya’s declared revenues and estimated earnings based on production and sales data. This shortfall suggests that millions of cigarette packs may have been either unaccounted for or underreported, raising concerns about possible tax avoidance or evasion. “This report should be a wake-up call for Kenyan authorities. If these discrepancies remain unexplained, they could indicate potential tax manipulation,” said Kennedy Waituika, a fraud and internal audit expert. Kenya Updates Tax Exemption Rules for Charitable Organisations BAT Kenya’s Response In a statement, BAT Kenya’s Managing Director, Crispin Achola, dismissed the allegations, asserting that the company fully complies with Kenya’s tax laws and financial reporting standards. “We have thoroughly reviewed the report and found it to be largely speculative, containing numerous errors and misrepresentations of BAT Kenya’s operations,” Achola stated. He emphasized that as a publicly listed company on the Nairobi Securities Exchange, BAT Kenya adheres to strict financial disclosure requirements and publishes audited financial statements in line with both local regulations and international reporting standards. Claims of Miscalculations BAT Kenya further criticized the report, arguing that the authors relied on incorrect assumptions when calculating the company’s revenues, profits, and tax obligations. The company claims the report failed to consider deductible costs, applied incorrect cigarette pricing, and disregarded applicable trade margins. Growing Scrutiny on Tobacco Industry Taxation The allegations come at a time when governments worldwide are increasing scrutiny on the tobacco industry’s tax practices, particularly in low- and middle-income countries. Tax experts argue that multinational tobacco firms often employ complex corporate structures and transfer pricing mechanisms to minimize tax liabilities, depriving governments of much-needed revenue for public health initiatives. As the debate continues, the findings of the report may prompt further investigations by tax authorities and policymakers into BAT Kenya’s financial practices. The outcome could have significant implications for corporate taxation and regulatory oversight within Kenya’s tobacco industry.

EASTERN AFRICA

BAT Kenya Refutes KSh 9.6 Billion Tax Discrepancy Allegations

February 18, 2025February 18, 2025 - by Jeremiah Amosu - Leave a Comment

British American Tobacco Kenya (BAT Kenya) has denied claims of financial discrepancies amounting to KSh 9.6 billion (US$ 93 million) following a recent investigative report that scrutinized the company’s tax …

EASTERN AFRICA

Kenya Updates Tax Exemption Rules for Charitable Organisations

February 13, 2025February 13, 2025 - by Jeremiah Amosu - Leave a Comment

Kenya has announced that the new Income Tax Exemption Rules for Charitable Organisations have officially taken effect a year after they were first introduced. “The government notifies taxpayers of the …

EASTERN AFRICA

Kenya Prolongs Tax Amnesty Programme to Mid-2025, Expands Coverage

February 3, 2025February 3, 2025 - by admin - Leave a Comment

Kenya Prolongs Tax Amnesty Programme to Mid-2025, Expands Coverage. In a strategic move to bolster tax compliance, Kenya has extended its tax amnesty initiative by six months, now concluding on …

EASTERN AFRICA

VAT on Auction Sales for Debt Recovery Now Mandatory in Kenya

February 3, 2025February 3, 2025 - by Jeremiah Amosu - Leave a Comment

VAT on Auction Sales for Debt Recovery Now Mandatory in Kenya. In a pivotal decision, Kenya’s Tax Appeals Tribunal (TAT) has ruled that auction sales conducted for debt recovery purposes …

EASTERN AFRICA

VAT in Kenya: President Ruto To Resolve VAT Refund Issue

October 28, 2023December 28, 2024 - by Jeremiah Amosu - Leave a Comment

VAT in Kenya in focus The Value Added Tax, VAT in Kenya is expected to receive renewed attention from President, Dr. William Ruto as he declared his willingness to improve …