KEPSA Submission on the Finance Bill 2025

On 30^th May 2025, the Kenya Private Sector Alliance (KEPSA) delivered its memorandum on the Finance Bill 2025 to the National Assembly's Departmental Committee of Finance and National Planning. KEPSA underscored that the bill must prioritise measures that will strengthen Kenya's economic competitiveness, encourage vital domestic and foreign investments, and drive long-term sustainable growth.

The KEPSA delegation, which included Ms. Jilna Shah (Vice Chair, KEPSA Public Finance Sector Board), Mr. Steve Okoth (Member, KEPSA Public Finance Sector Board), and Mr. John Njogu (Vice Chair, KEPSA Energy Sector Board), outlined a range of recommendations designed to resolve critical tax administrative issues present in the proposed bill.

Key Recommendations in the KEPSA Memorandum:

1. Resolution of VAT Refund Challenges: KEPSA proposed innovative strategies to address the persistent issue of VAT refunds, including the conversion of verified VAT refund dues into tradable bonds. This approach aims to provide liquidity and certainty to businesses while alleviating delays in refund processing.
2. Retention of Indefinite Carry Forward of Tax Losses: KEPSA strongly advocated for retaining the provision allowing the indefinite carry forward of tax losses, which the Finance Bill 2025 proposes to eliminate from the Income Tax Act. This measure is essential to support businesses facing financial difficulties and promote long-term investment.
3. Protection of Client Data: In alignment with the Data Protection Act, KEPSA recommended the deletion of provisions in the Finance Bill that would permit the Kenya Revenue Authority (KRA) to access personal data without adhering to data protection regulations. This safeguard is critical to maintaining trust and compliance with privacy laws.
4. Exemptions for Withholding VAT: KEPSA proposed empowering the KRA Commissioner General to grant exemptions from Withholding VAT in specific cases, including scenarios where products are price-regulated, businesses consistently maintain a credit position, or profit margins cannot sustain the stipulated 2% Withholding VAT rate. This flexibility would support businesses operating under unique financial constraints.

For a detailed review of the KEPSA Memorandum on the Finance Bill 2025, please refer to this link.

KEPSA thanked the Committee for the Continued Dialogue on the Finance Bill 2025, which underscores the importance of collaborative dialogue between the private sector and policymakers to shape a fiscal policy that supports Kenya’s long-term economic aspirations.