Tax Relief for Kenyans? CS Mbadi on 2025 Finance Bill

Treasury Cabinet Secretary John Mbadi has announced plans to ease the tax burden on Kenyan workers in the upcoming financial year.

Speaking at the Bunge la Mwananchi forum at Jeevanjee Gardens in Nairobi on February 3, Mbadi made firm commitments regarding the Finance Bill 2025.

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The CS took a strong stance against further taxation of employment income, stating:

Regarding Value Added Tax (VAT), Mbadi was equally decisive:

The Federation of Kenya Employers (FKE) has revealed concerning statistics about the current tax situation. According to FKE director-general Jacqueline Mugo, employees are losing nearly half their earnings to various deductions and taxes.

The situation has worsened under President William Ruto’s administration due to multiple new tax implementations.

Mugo expressed serious concerns about the sustainability of current tax levels:

Despite the promised tax relief, Mbadi cautioned about ongoing financial challenges. During the forum, attended by KRA chairman Ndiritu Muriithi, he discussed several critical points:

– The country’s significant debt burden continues to impact economic decisions

– Kenya’s close call with Eurobond default in 2024 led to currency depreciation

– The upcoming Eurobond repayment in 2027 presents additional challenges

– Recent Moody’s credit rating upgrade could help secure more favorable borrowing terms

The Treasury CS emphasized that while employment taxes will not increase, broader financial relief may take time due to existing debt obligations and repayment schedules.