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{
"id": 1591202,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591202/?format=api",
"text_counter": 188,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for The National Treasury and Economic Planning",
"speaker": null,
"content": "Last year, some provisions in the Finance Bill, 2024 triggered protests across the country. Those actions in the two years regrettably resulted in the loss of lives and destruction of property and adversely impacted the economic lives of many. In remembrance of our fellow Kenyans who lost their most precious lives during those protests, let us observe a minute of silence."
},
{
"id": 1591203,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591203/?format=api",
"text_counter": 189,
"type": "speech",
"speaker_name": "Hon. Speaker",
"speaker_title": "",
"speaker": null,
"content": "Hon. Members, be upstanding."
},
{
"id": 1591204,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591204/?format=api",
"text_counter": 190,
"type": "scene",
"speaker_name": "",
"speaker_title": "",
"speaker": null,
"content": "(The House observed a minute of silence)"
},
{
"id": 1591205,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591205/?format=api",
"text_counter": 191,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
"speaker": null,
"content": " May their souls continue resting in eternal peace."
},
{
"id": 1591206,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591206/?format=api",
"text_counter": 192,
"type": "speech",
"speaker_name": "Hon. Speaker",
"speaker_title": "",
"speaker": null,
"content": "Thank you. Take your seats."
},
{
"id": 1591207,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591207/?format=api",
"text_counter": 193,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
"speaker": null,
"content": " Hon. Speaker, no life should be lost and no property should be destroyed again. The message from Kenyans was clear. Since I took office at the Ministry of the National Treasury and Economic Planning, I assured Kenyans that we shall strive to reduce the tax burden. In this respect, the Finance Bill, 2025 has neither proposed new taxes nor raised any tax rates. Instead, we have chosen to enhance tax revenue collection through administrative reforms by simplifying and streamlining tax laws to make them clearer and easier to implement, thereby improving taxpayer compliance. The process also involves rationalisation of tax expenditure to enhance equity and fairness. The revenue foregone through tax incentives or tax expenditures has increased significantly from Ksh393.1 billion in 2022, which is equivalent to 2.9 per cent of the Gross Domestic Product (GDP), to Ksh510.6 billion in 2023, which is equivalent to 3.4 per cent of GDP. To reverse this trend, the Finance Bill, 2025 proposes reforms to rationalise tax expenditures so as to promote equity, fairness, efficiency and reduce distortions within the tax system. The proposed reforms are in line with the National Tax Policy and the Medium-Term Revenue Strategy. Hon. Speaker, from the proposed reforms, we expect to raise Ksh30 billion more as additional revenue. Customs measures agreed upon by East African Community (EAC) Ministers during the pre-budget meeting are intended to protect our industries and ensure they access raw materials and inputs at affordable prices. The meeting allowed Kenya to import tea packaging materials at a lower duty rate of 10 per cent. In addition, Kenya was granted an extension of duty remission to import wheat at the rate of 10 per cent. These measures will support our wheat and tea farmers. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
},
{
"id": 1591208,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591208/?format=api",
"text_counter": 194,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
"speaker": null,
"content": "I will begin with the customs measures and later provide highlights on the proposed amendments of tax laws in the Finance Bill, 2025. To meet the local demand of rice, Kenya was allowed to extend the stay of application on the EAC Common External Tariff and import rice at the rate of 35 per cent or US$200 per metric tonne, whichever is higher, instead of the Common External Tariff rate of 75 per cent or US$345 per metric tonne. Mindful of wheat farmers in Kenya, EAC Ministers agreed on duty remission of wheat at a rate of 10 per cent instead of the Common External Tariff rate of 35 per cent, provided the millers who intend to import wheat under the duty remission must first purchase locally produced wheat. To promote local assembly of telecommunication equipment, Kenya was granted an extension of duty remission on inputs for assembly of telecommunication devices, including mobile phones, laptops and tablets. In order to reduce the production cost of animal feeds, Kenya requested for an extension to import inputs for production of animal feeds duty-free under the EAC duty remission scheme which was granted. We urge the producers of animal feeds to apply for the remission. Hon. Speaker, the leather sector is one of the priority value chains under BETA. To support local producers of leather and leather products, Kenya was allowed to extend the stay of application on the Common External Tariff rate and apply import duty rate of 35 per cent on leather products. To promote tanneries and supply local manufacturers with high quality leather, Kenya was allowed to import chemicals for leather processing under duty remission. To support local assembly of transformers, which is critical to energy distribution, the EAC Ministers approved Kenya's request for a tariff split on transformers to provide for a distinction between fully built and unassembled transformers. Currently, it is one tariff line which is very difficult for us to separate and incentivise either of them. To support the local assemblers of cranes, Kenya was granted approval to import inputs for assembly of cranes duty-free under duty remission. Last year, Kenya was granted a stay of application on the EAC Common External Tariff to apply a higher duty rate ranging from 25 to 35 per cent on certain types of paper used in manufacturing packaging materials. This action adversely affected exporters, particularly in the tea sector. To address this, Kenya opted not to request for an extension of the stay of this Common External Tariff. This decision will not affect local manufacturers of packaging materials as they will continue importing raw materials under duty remission. Hon. Speaker, let me speak to the Finance Bill, 2025. I will highlight some of the proposals contained in the proposed Finance Bill, 2025. Under Income Tax Act, to enable faster recovery of investment by businesses on loose items such as utensils, linen and industrial tools, the Bill proposes to amend the Income Tax Act to allow for a full cost deduction of these items in the first year of purchase as opposed to the current three years. This will improve cashflows of the relevant businesses. We have noted increased tax disputes arising from audits carried on cross-border transactions. These disputes could have been avoided if the multinational companies had Advance Pricing Agreements with the Commissioner at KRA. To address this gap, the Bill proposes to amend the Income Tax Act to empower the Commissioner to enter into Advance Pricing Agreements with multinational companies. Hon. Speaker, the Tax Laws (Amendment) Act, 2024, passed in December last year, introduced the Minimum Top-up Tax in line with global best practices. The Act inadvertently omitted the due date for payment of the tax, thus creating enforcement challenges. To address this, I have proposed an amendment to the Income Tax Act to clarify that the due date will be the end of the fourth month following the close of a company's accounting period. Again, the Tax Laws (Amendment) Act, 2024, passed in December last year, exempted gratuity payments from income tax – Pension and gratuity. However, the provision is not clear whether all gratuity, including from private pension schemes, is exempt from tax. In this The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
},
{
"id": 1591209,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591209/?format=api",
"text_counter": 195,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
"speaker": null,
"content": "respect, the Bill is proposing to amend the Income Tax Act to clarify that all gratuity payments, whether from public or private sources, are exempt from tax. To encourage wider participation in virtual asset transactions, especially among the youths, the Bill proposes to reduce the digital asset tax rate from 3 to 1.5 per cent. And to ensure consistency and effective administration of the law, the Bill proposes to amend the Third Schedule to the Income Tax Act to clarify that fringe benefit tax is payable by the employer at the corporate tax rate, and that withholding tax on qualifying dividends and qualifying interest is final tax. That is not clear in the current arrangement. Hon. Speaker, under the current Income Tax Act, individuals with mortgages, and Hon. Members, would be interested in listening to this, for purchasing or improving residential houses can claim tax relief on interest payments on the mortgage. However, those who take up a mortgage to construct their residential houses are excluded from this relief. That is the law as it is today. To ensure fairness, the Bill proposes to extend this benefit to interest on mortgages taken for the construction of residential houses. This will support home ownership and align with the BETA Pillar on Affordable Housing. The current tax-free daily subsistence allowance of Ksh2,000 for private sector employees on official duties outside their usual workplace is lower than that of the public sector employees. To enhance equity, the Bill is proposing to increase the tax-free daily subsistence allowance for private sector employees from Ksh2,000 to Ksh10,000. Kenya has an opportunity to strengthen its position as a regional financial hub. In this respect, the Bill proposes amendments to the Income Tax Act to provide that companies certified by the Nairobi International Financial Centre Authority (NIFCA) that invest new capital of at least Ksh3 billion over three years to pay a reduced corporate tax rate of 15 per cent for the first 10 years and 20 per cent for the subsequent 10 years. The companies qualifying for this will be required to employ Kenyans at the senior management level. The start-up companies that are certified by the Nairobi International Financial Centre Authority will enjoy a 15 per cent tax rate for the first three years and 20 per cent for the subsequent four years. Dividends earned by certified holding companies and regional headquarters will be exempted from tax, provided that at least Ksh250 million is reinvested annually in Kenya. We have noted that some employees seek refunds from KRA on reliefs of deductions that ought to have been deducted by their employers. To address this challenge, the Bill proposes to amend the Income Tax Act to make it mandatory for employers to consider all eligible tax reliefs and deductions when computing employees' income tax. Presently, employers are not compelled to deduct these reliefs in computing Pay As You Earn. On Value Added Tax, while a supplier is required to issue a Tax Invoice at the point of sale, there is currently no definition of tax invoice under the VAT Act. This creates ambiguity on what constitutes a Tax Invoice. To resolve this ambiguity, the Bill proposes to amend the VAT Act to define a Tax Invoice. Hon. Speaker, to strengthen tax administration and enhance compliance, the Bill proposes to require the issuance of tax invoices for all supplies whether taxable or exempt. This amendment will support better record-keeping by taxpayers and facilitate the pre-population of returns. To support business operations, the Bill proposes to shorten the period for claiming refunds on bad debts from three years to two years, and to allow taxpayers to either request for a refund or offset it against future VAT liabilities. Entities in Special Economic Zones currently benefit from VAT exemptions and zero-rating, but there is no provision to recover tax when these benefits are misused. To safeguard revenue and promote accountability, the Bill proposes to recover VAT where exempted or zero-rated goods or services are used for purposes other than those intended. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
},
{
"id": 1591210,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591210/?format=api",
"text_counter": 196,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
"speaker": null,
"content": "Hon. Speaker, to prevent revenue leakages, strengthen tax administration and promote equity across sectors, the Bill proposes to move some zero-rated goods and services that are consumed locally to exempt status. Further, some of the goods exempted from VAT have multiple uses making it difficult to effectively monitor whether they are finally used for the intended purpose. In this respect, the Bill proposes to amend the VAT Act to remove such exemptions. On Excise Duty, to minimise tax disputes relating to classification of locally produced excisable goods, the Bill proposes an amendment to the Excise Duty Act to clarify that the East African Community Common External Tariff and its classification rules shall apply to all excisable goods, both imported and locally manufactured. To streamline the processing of applications for licenses to manufacture excisable goods by the Commissioner, the Bill proposes to amend the Excise Duty Act to require the Commissioner to provide feedback on the application within 14 working days from the date of receipt of all valid documents. Hon. Speaker, the Excise Duty Act provides for taxation of alcoholic beverages based on pure alcohol content, which increased cost for producers using spirits over 90 per cent alcohol content as raw materials from Ksh356 to about Ksh1,000 per litre. Since undenatured extra neutral alcohol is a key input in the manufacturing of spirituous beverages, the Bill proposes to amend the Excise Duty Act to provide an excise duty rate of Ksh500 per litre for undenatured extra neutral alcohol above 90 per cent strength supplied to licensed spirituous beverage manufacturers. To promote equity and fairness in taxation of excisable services offered through the internet or electronic network, the Bill proposes to amend the Excise Duty Act to bring non- resident persons without a physical presence in Kenya into the tax net when they supply excisable services through these mediums. To avoid double taxation of fees charged by digital lenders, the Bill proposes to amend the definition of \"digital lender\" under the Excise Duty Act to exclude entities licensed under the Banking Act, the Co-operative Societies Act, and the Microfinance Act. Hon. Members, to enhance clarity and consistency in the administration of excise duty legislation, the Bill proposes to amend the Excise Duty Act to clarify that imported plastic products, including plates, self-adhesive plastics, and printed polymers, will be subject to excise duty at 25 per cent of the excisable value or Ksh200 per kilogramme, whichever is higher. Regarding miscellaneous fees and levies, the Export and Investment Promotion Levy on billets and wire rods, which are raw materials in the manufacture of nails, fencing wires, gabions, bolts and nuts, have raised production costs of these products. In this respect, the Bill proposes to amend the Miscellaneous Fees and Levies Act to review the Levy downwards. To promote Nairobi as regional aircraft maintenance hub, while managing tax expenditures, the Bill proposes to amend the Miscellaneous Fee and Levies Act to introduce Import Declaration Fee and Railway Development Levy on small aircrafts and helicopters but retain the exemption on spare parts for all aircrafts. Next is the Tax Procedures Act, 2015."
},
{
"id": 1591211,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1591211/?format=api",
"text_counter": 197,
"type": "scene",
"speaker_name": "",
"speaker_title": "",
"speaker": null,
"content": "(Several Members spoke off the record)"
}
]
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