Kenya’s 2025 Finance Bill Faces Fierce Backlash from Business Sector

Kenya’s proposed Finance Bill, 2025, is already stirring tension across the business landscape, with key stakeholders warning that several of its provisions could stifle industrial growth, increase consumer costs, and force more jobs out of the country. 

From manufacturers to tax experts, there’s a growing consensus: the bill appears to be more of a burden than a boost. 

At the center of the storm is the government’s proposal to move certain goods from zero-rated to tax-exempt status. While this may sound technical, the real-world implication is clear—prices will rise. 

“When products become tax-exempt, producers can no longer claim VAT refunds on inputs. That makes everything more expensive,” explained Tobias Alando, CEO of the Kenya Association of Manufacturers (KAM). “It’s the consumer who pays the ultimate price.” 

Another key issue is the removal of the 15% corporate tax incentive for local vehicle assemblers—an incentive that had been instrumental in promoting domestic auto manufacturing. Alando fears this change could deal a serious blow to an already struggling sector. 

He also raised concerns over the proposed excise duty on plastic packaging materials imported from outside the East African Community (EAC). Rather than promoting local alternatives, this could backfire. 

“If it becomes cheaper to import finished packaging than to produce locally, companies will outsource. And that means fewer jobs for Kenyans,” Alando warned. 

The Kenyan manufacturing sector currently employs over 369,000 people directly. However, Alando pointed out that high taxes on raw materials and inputs are crippling its competitiveness. 

“When local manufacturers face a tax burden as high as 60% compared to imported goods, it becomes nearly impossible to scale. We’re asking the government to revisit these duties if we are serious about industrial growth,” he urged. 

Beyond the direct taxes, the Finance Bill also proposes giving the Kenya Revenue Authority (KRA) broader access to business trade secrets and personal data through electronic tax systems. While the government argues this will enhance compliance and transparency, businesses fear it could open the door to overreach and misuse. 

With the government’s annual budget reading set for today, critics say the spending plan lacks meaningful measures to improve the living standards of ordinary Kenyans. And while it sidesteps new direct taxes, the indirect implications of the bill could be just as painful. 

For many in Kenya’s business community, the message is clear: without a rethink, the Finance Bill 2025 could do more harm than good.