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"id": 1590402,
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"content": "Second Reading"
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"content": "THE FINANCE BILL (National Assembly Bill No.19 of 2025)"
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"id": 1590404,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590404/?format=api",
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"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
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"content": " Hon. Deputy Speaker, I beg to move that the Finance Bill (National Assembly Bill No.19 of 2025) be now read a Second Time. For the last 32 days, the Departmental Committee on Finance and National Planning has dutifully and diligently discharged its mandate in accordance with Standing Order 245 through a comprehensive review and consideration of the Finance Bill, 2025. These men and women have worked during weekends and holidays, from 9.00 a.m. to midnight every day, traversing 20 different counties of this great Republic to ensure that this House has a comprehensive report on the Bill. 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": 1590405,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590405/?format=api",
"text_counter": 335,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "The task now rests with this House to dutifully deliberate on the Committee's Report and the proposed tax measures with a view to ensuring that this country has a prudent balance between revenue mobilisation and expenditure obligations. It is our collective responsibility to ensure that the Bill supports sustainable economic growth while remaining responsive to the needs of the people. Unlike previous Finance Bills presented to this House, the Finance Bill, 2025 is not merely a revenue-raising tool but a vital policy-making instrument that will reform the broader tax landscape. Its central focus is to enhance tax revenue collection through strategic administrative reforms and improve taxpayer compliance. Rather than introducing new taxes, the Bill proposes the simplification of existing tax laws to make them clearer, more predictable and accessible to all taxpayers. This simplification includes consolidating overlapping provisions and eliminating outdated or redundant clauses that continue to burden the current legal framework. The Finance Bill, 2025 embodies the Government's commitment to modernising tax administration and fostering a culture of trust and cooperation between the Kenya Revenue Authority (KRA) and the citizens. It introduces a range of policy measures designed to strengthen the efficiency of revenue collection, including the use of technology, improved data analysis and risk-based audits. These reforms are aimed at curbing tax evasion, expanding the tax base and ensuring that all eligible taxpayers contribute their fair share of tax."
},
{
"id": 1590406,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590406/?format=api",
"text_counter": 336,
"type": "scene",
"speaker_name": "",
"speaker_title": "",
"speaker": null,
"content": "[The Deputy Speaker (Hon. Gladys Boss) left the Chair]"
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{
"id": 1590407,
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"text_counter": 337,
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"speaker": null,
"content": "[The Temporary Speaker (Hon. Peter Kaluma) took the Chair]"
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{
"id": 1590408,
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"text_counter": 338,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "The decision by the Committee on the Finance Bill, 2025 is anchored on a well- established framework and past legislative measures. Since the enactment of the Finance Act, 2023, the Committee has operated under a consistent set of guiding principles and policies that have shaped its review of various tax measures, including the Finance Bill, 2024, The Tax Laws (Amendment) Act, 2024, The Business Laws (Amendment) Act, 2024, The Tax Procedures (Amendment) Act, 2024, The National Tax Policy as an overarching framework, together with the Medium-Term Revenue Strategy, which has been very central to these efforts. These policies aim to ensure predictability and sustainability within the tax system, thereby, fostering a more conducive environment for business. Since the enactment of the Finance Act, 2024, this House has approved a series of tax measures aimed at achieving specific revenue targets that support fiscal sustainability. The Finance Act, 2022 had a projected revenue of Ksh22 billion, The Finance Act, 2023 had a projected revenue of Ksh211 billion, whereas the Finance Bill, 2024 had intentions of raising Ksh344 billion. The Tax Laws (Amendment) Act, 2024 projected revenue of Ksh49 billion, but the Finance Bill, 2024 only projects revenue of Ksh24 billion. Therefore, through the rationalisation of tax incentives, improved compliance and ongoing legislative reforms, the Government projects to generate an additional Ksh24 billion in revenue for the 2025/2026 Financial Year, underscoring the commitment to building a fair, transparent and efficient tax system. After reviewing the Finance Bill, 2025, the Committee proposed a series of amendments aimed at enhancing the efficiency of the country's tax framework. In its deliberations, the Committee carefully considered stakeholders' submissions, along with the strategic guidance provided by the Medium-Term Revenue Strategy and the National Tax Policy. Further, the Pigouvian Tax Principle, one of the works of the great British economist Arthur Cecil Pigou, is also reflected in this Bill. Measures such as maintaining tax exemption for renewable energy products and electric mobility companies correct negative externalities. 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": 1590409,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590409/?format=api",
"text_counter": 339,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "Rewarding consumable practices aligns with Kenya's commitment to climate change under the Paris Agreement and the Kenya Vision 2030. Many of the proposals draw from the Keynesian Fiscal Stimulus Principle, which argues for proactive government intervention to spur aggregate demand during times of economic slack. By incentivising sectors such as housing, green energy and manufacturing, the Bill aims to create jobs, increase household incomes and drive long-term economic growth while preserving fiscal discipline. As Richard Musgrave said in his book, The Theory of PublicFinance in 1959, public finance is not just about raising revenue, but about shaping the economy and the society that we, the just people of Kenya, want. Further, the primary objective of the Bill is guided by stakeholder input with the views of Kenyans and established policy frameworks to streamline tax expenditures, reduce revenue leakage and promote fairness through targeted tax incentives aligned with the national development goals. In addition, the amendments proposed by the Committee aim to enhance predictability and stability within the tax regime, critical factors in fostering a conducive and competitive business environment that supports long-term investment and effective economic planning. A consistent and transparent tax framework empowers investors to make informed, long-term decisions with greater confidence by reducing the uncertainty often associated with frequent unpredictable legislative changes. The Committee conducted extensive public participation and based on the views received, proposed far-reaching amendments to the Bill while also expressing support for certain provisions as originally drafted. The definition of the word “software” in Clause 2 includes both the software itself and its distribution within the meaning of royalty. The Committee observed that the distribution of software does not by itself constitute a royalty-generating activity and, therefore, including it in a search could lead to unintended tax implications for distributors. In line with international best practices, the Organisation for Economic Co-operation and Development (OECD) guidelines and to safeguard the interests of stakeholders and Kenyans operating in the sector, the Committee recommended the deletion of the phrase to exclude the distribution of software from the definition. This amendment seeks to provide clarity amid misinterpretation and ensure a fair and accurate tax framework for software-related transactions. Clause 4 of the Finance Bill proposes a clean-up of the amendments introduced under the Tax (Amendment) Act, 2024, which exempted all pension payments, including lump-sum withdrawals from Income Tax. However, certain provisions that previously granted separate exemptions for lump-sum pension payments were not repealed, resulting in a potential ambiguity. To address this, the Bill seeks to repeal those redundant provisions and rated exemptions. The Committee supported this proposal noting that the amendment enhances clarity and affirms that all pension payments, whether received as a lump-sum or monthly, are fully exempt from Income Tax as originally intended. The Committee carefully considered Clause 6, which proposes to remove the Ksh5 million threshold for the Significant Economic Presence Tax (SEPT). The Committee observed that the existence of the threshold creates loopholes for revenue leakage, particularly because non-resident entities or individuals are not required to file tax returns. This makes it difficult for the KRA to verify compliance. As a result, the KRA is unable to confirm whether the threshold has been met, therefore, hindering effective enforcement. To address this challenge, the Committee supported the proposal to remove the SEPT threshold altogether as a means of enhancing compliance and reducing opportunities of tax avoidance. On Clause 8(a)(v) and (vi) that pertains tax deductions for construction of stadia, the Committee welcomes the proposal as a progressive step that aligns with the government’s agenda of promoting sports infrastructure and youth development across the country. Investing 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": 1590410,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590410/?format=api",
"text_counter": 340,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "in modern sports facilities not only supports talent development but also, fosters social cohesion, community engagement, and economic activity through sports tourism and related enterprises. However, the Committee raised concerns over the proposal to delete the provision that allows tax deductions for sponsorship of sports activities. The Committee noted that this move would likely discourage private sector involvement in sports sponsorship that has been instrumental in nurturing athletes, supporting local teams, and elevating Kenya’s profile on the global sports stage. Retaining this incentive is in line with the government’s broader objectives under the Bottom-Up Economic Transformation Agenda (BETA) that prioritises youth empowerment, job creation, and expanding opportunities in creative and sports industries. As such, the Committee recommends that the provision on sports sponsorship be retained to ensure continued collaboration between the public sector and the private sector in driving growth and excellence in the sports of this country. It is interesting to note the growth of our sports sector and especially, the love Kenyans have for our local teams. Both provisions allow the private sector to invest in stadiums and make it an investment deduction on their income tax and sponsoring these sporting activities. It is a great step to ensuring that we further enhance our local sports. Hopefully, we will fill our stadia and watch our television sets as much as we watch small teams like Arsenal play."
},
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"text_counter": 341,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "The Committee reviewed and supported Clause 8(b)(i) that proposes to amend the Income Tax Act to allow interest deductions on mortgages taken for construction of residential houses. Under current legal framework, the Committee noted that such deductions are limited to mortgages used to purchase or improve primary residences, with no express provision permitting deductions for home construction. The gap excludes individuals who opt to construct their own homes from benefiting mortgage interest relief. The Bill explicitly seeks to include mortgage interest deductions for residential construction. Thereby, reducing the tax burden for individuals financing home construction. The Committee supported this proposal noting that it promotes fairness and encourages investment in home ownership. The role of taxation is not to punish wealth but to fund common good and correct market blind spots. The Committee carefully considered Clause 8(c) and (d) that proposes to introduce a time limit on the carry-forward of business losses. Currently, businesses may carry forward losses indefinitely yet they are only required to retain records for five years. It creates verification challenges. To address this, the Bill is proposing a five-year cap. However, after listening to stakeholders, the Committee amended the proposal to allow for additional five years extension upon application and approval. The approach balances administrative efficiency with business flexibility. It aligns with the public finance principle of time consistency and fair tax policing outlined by Richard Musgrave. It reduces the abuse of indefinite carry forwards and promotes simplicity, predictability and equity in tax systems. Clause 16 introduces a withholding tax on payments to non-resident ship owners. The Committee supported the proposal as a strategic move to enhance tax compliance and revenue collection from foreign entities that operate in Kenya without a physical presence. The measure reduces dependency on self-reporting and ensures earlier and more reliable tax remittances through withholding at source. With proper implementation guidelines and digital systems, the Committee noted that the measure could be administered efficiently and fairly. It aligns with the Benefit Principle of Taxation that holds that those who benefit from operating in a particular market should contribute to its tax base. Moreover, this is consistent with the UN Model Double Tax 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."
}
]
}