Public hearings begin on Finance Bill 2025 in counties

The Finance Bill 2025 is now under public scrutiny at the county level, with the National Assembly Finance and Planning Committee opening the floor to citizens in Busia and Migori.

The move follows a week-long round of stakeholder presentations in Nairobi. Committee vice chairperson Benjamin Langat said public input will play a key role in shaping the final document.

"This is not an exercise in futility, it’s a very important exercise. This Finance Bill is a proposal to the National Assembly and it has to undergo the necessary legislative process, including public participation, to become law," Langat said.

He urged citizens to weigh the bill alongside budget estimates. "I want to implore the public to desist from looking at the Finance Bill in isolation. When you tell us to employ junior secondary school teachers, or even more nurses, the money to cater for that must come from somewhere. This Bill is the instrument we use to raise such funds," he said.

Among the most contested clauses is one that redefines ‘royalty’ under income tax to include software use through distributors. The Kenya Association of Manufacturers wants it scrapped, warning that it goes against international tax standards.

"Under the right-based approach, only payment for the right of use, right to use and copyrights qualify as royalties. The proposed expansion of the definition of ‘royalty’ deviates from the globally accepted definition that borrows heavily from the OECD’s rights-based approach under which only payments for the use of, or the right to use, copyrights qualify as royalties," KAM CEO Tobias Alando explained.

KAM also raised concerns over a proposed 35% excise duty on imported gas cylinders, asking for exemptions on those used for industrial and medical purposes.

They pointed out that such cylinders are not produced locally and are essential for healthcare services.

"Importing this kind of gas cylinder attracts a 35 per cent excise duty, which was introduced in Kenya in 2019, primarily aimed at promoting local manufacturing and reducing reliance on imports for LPG cylinders, which at that time, under the EAC Common External Tariff (CET), has no distinct description from other compressed gas cylinders," KAM said in its submission.

The International Institute for Legislative Affairs took a health-based approach, calling for tax hikes on harmful products like tobacco, alcohol, and sugar-sweetened beverages.

They said the country loses thousands of lives each year to diseases linked to these products and asked for tougher taxation measures.

"Taxes on emerging nicotine products, such as oral nicotine pouches and electronic cigarettes, are also significantly lower despite being heavily marketed to youth," the institute said.

On alcohol, they proposed raising excise duty on beer from Sh22.5 to Sh33 per centiliter of pure alcohol, arguing that the change would cut youth access and raise funds for health care.

For sugary drinks, they called for at least a 10% rise in the excise tax rate and recommended a sugar-based tax model as part of efforts to prevent non-communicable diseases.

The Kenya Youth Climate Advisory Council criticised a proposed 25 percent or Sh200/kg excise duty on imported plastic films, saying it could cripple youth-led enterprises focused on sustainable packaging.

They cited feedback from businesses under the Mombasa Plastics Prize Incubator that indicated the cost burden would make eco-friendly products less competitive.

To encourage innovation, KYCAC proposed that certified biodegradable plastic film used in sustainable packaging by youth-owned businesses be taxed at only 5% or Sh50/kg.

As the public hearings move into counties, the committee is expected to gather more feedback from residents, with a promise to reflect their views in the final version of the bill.