The long-awaited Finance Bill, 2025, was published by the government under a gazette notice after being tabled in the National Assembly. This was before the House proceeded on its long recess and just before the statutory deadline for tabling as required under the Public Finance Management Act, 2012.

A review of the Bill indicates a “clean-up” exercise, with proposed changes that focus more on tax administration and efficiency rather than introducing new tax-raising measures. Several proposals are reintroductions from the withdrawn Finance Bill, 2024, while others aim to clarify provisions introduced under the Tax Laws (Amendment) Act, 2024, which was hastily passed in December last year. 

Key measures include the removal of certain tax exemptions and the elimination of specific eligibility thresholds to attract more taxpayers.

This aligns with earlier sentiments expressed by the Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi, during political sensitisation engagements, where he emphasised a fiscal consolidation approach that would still “put money in Mwananchi’s pockets” in relation to expectations for the 2025 Finance Bill.

Even so, this was an expected turn of events, considering that this year’s Bill will face heightened public scrutiny following the unprecedented events of June 2024, when the Finance Bill, 2024, was withdrawn in response to nationwide protests over tax-raising proposals.

That moment marked a significant turning point in Kenya’s fiscal policy landscape, underscoring the need for transparency and accountability in the preparation and passage of the budget cycle.

Once enacted, the Bill’s provisions will take effect on a two-tiered basis. Provisions relating to Advance Pricing Agreements (Section 12 of the Bill ) and amendments to penalty provisions (Section 56 of the Bill ) will come into effect on 1st January 2026, while all other sections will take effect on 1st July 2025, the beginning of the 2025/26 financial year. 

According to parliamentary procedure, the Finance Bill, 2025, will first be introduced in the National Assembly for Its First Reading, a procedural stage that involves tabling the Bill without debate. Thereafter, the Finance and National Planning Committee is mandated to conduct public participation, as stipulated in Article 118 of the Constitution.

The public participation process begins with an official call for written memoranda from the public and interested stakeholders. This will be followed by validation forums and stakeholder consultations across various sectors. The insights and recommendations collected will be consolidated into a report by the Committee, which will inform proposed amendments during the legislative debate.

Following public participation and the tabling of the Committee’s report, the Bill will proceed to the Second Reading, where Members of Parliament will debate its general principles. It will then be advanced to the Committee of the Whole House for a clause-by-clause examination and possible amendments, before the Third Reading for final consideration and passage.

 If passed, the Bill will be forwarded to the President for assent, and once signed, it will become the Finance Act, 2025. 

As required by the Public Finance Management Act, 2012, the Finance Bill must be enacted by June 30 to coincide with the start of the new financial year on July 1.

Nonetheless, the clean-up process is expected to result in winners and losers among various stakeholder groups, depending on how the proposed changes affect their respective sectors.