Accountants urge retention of housing incentives in Finance Bill 2025

The Institute of Certified Public Accountants of Kenya (ICPAK) has outlined key recommendations to the National Assembly aimed at overhauling tax policies in the Finance Bill 2025 to promote industrial development and improve economic performance.

The body called for the removal or reduction of various taxes, including excise duties on locally manufactured plastic products and other industrial inputs, to support local industries.

Among their key proposals is the introduction of Advance Pricing Agreements (APAs) for non-resident companies, which would help minimize tax disputes by pre-agreeing pricing methods between related parties across borders.

If adopted, Kenya would join regional neighbors Tanzania, Uganda, and Rwanda, which have similar APA provisions.

However, ICPAK cautions that regional experience shows few APAs have been finalized due to administrative challenges and limited taxpayer interest, highlighting the need for clear procedures and improved capacity.

The accountants also opposed extending the approval period for income tax exemption applications from 60 to 90 days as proposed in the bill, recommending the retention of the current 60-day limit.

On excise duties, ICPAK seeks the removal of taxes on locally produced or imported industrial inputs to boost competitiveness.

They also advocate for retaining tax incentives for local vehicle assembly and the harmonization of tax policies across sectors such as health, energy, and motorcycle assembly.

The institute stresses that these reforms are crucial for creating an enabling environment that encourages investment, supports local manufacturing, and ultimately enhances revenue collection.

They emphasize that the government’s balancing act in the Finance Bill 2025 should not come at the expense of measures that promote economic growth and industrialization.