The 2025 Finance Bill brings significant changes, particularly one that would allow the Kenya Revenue Authority (KRA) to access personal and transactional data from businesses.
In the bill tabled before Parliament on Wednesday, the government proposes removing Section 59A(1B) of the Tax Procedures Act. This clause currently protects businesses from having to share customer data or trade secrets with KRA. If approved, the change would give KRA the power to require businesses to provide detailed transactional information, including data from their integrated systems.
At present, Section 59A(1B) prevents KRA from forcing companies to link their internal systems with the tax authority’s, particularly if such integration might expose sensitive business information or personal customer data. Removing this clause would grant KRA the ability to mandate full integration, widening its access to private data for tax enforcement and compliance purposes.
Bill Reintroduces Power for Cabinet Secretary
The bill also seeks to reinstate powers for the Cabinet Secretary (CS) of the National Treasury to waive penalties and interest on tax obligations. This provision, which was removed in the 2023 Finance Act over concerns about potential abuse and lack of transparency, would be brought back with new safeguards. Under the new proposal, the CS could waive penalties or interest, but only if electronic tax system errors were to blame. This could include issues such as system-generated mistakes, delays in updating taxpayer data, duplicated charges due to malfunctions, or incorrect taxpayer registration.
The bill reads: “The Cabinet Secretary may, on the recommendation of the Commissioner, waive the whole or part of any penalty or interest imposed under this Act where the liability to pay the penalty or interest was due to: (a) an error generated by an electronic tax system; (b) a delay in the updating of an electronic tax system; (c) a duplication of a penalty or interest due to a malfunction of an electronic tax system; or (d) the incorrect registration of the tax obligations of a taxpayer.”
In addition, the 2025 Finance Bill has simplified the implementation schedule. Most provisions will come into effect on July 1, 2025, eliminating the previously proposed three-tier structure. Two clauses have been deferred until January 1, 2026, while the remaining 57 provisions will be enacted as planned on July 1, 2025.
