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Kenya's Tax Overview:

Last reviewed – 26 February 2025

KEY TAX DEVELOPMENTS

1. Finance Act 2023 & 2024 Updates

  • Expansion of VAT scope and increase in excise duties.
  • Adjustments to corporate tax rates affecting multinational corporations (MNCs) and large businesses.
  • Digital Service Tax (DST) realigned to comply with international taxation standards. requirements businesses and individuals need to be aware of in 2025.

2. Mandatory Electronic Tax Invoicing (e-TIMS)

  • Businesses are required to implement automated VAT reporting for enhanced compliance.
  • Mandatory adoption across all businesses to improve tax transparency.

3. Transfer Pricing & Cross-Border Taxation

  • Stricter enforcement of related-party transaction regulations.
  • Enhanced oversight on MNCs to curb tax evasion.

4. VAT on Repossessed & Auctioned Assets

  • Businesses, including banks and financial institutions, must pay VAT on auctioned and repossessed assets.
  • Kenya Revenue Authority (KRA) has enforced this rule to enhance VAT collection from asset disposals.

5. Taxation of NGOs & Non-Profits

  • Updated tax exemption criteria and new VAT refund regulations.
  • Stricter compliance requirements on donor funds and financial reporting.

6. Taxation of High-Income Earners

  • Personal Income Tax (PIT) rate increased to 35% for individuals earning above Ksh 500,000 monthly.
  • Revised tax brackets for progressive taxation.

7. Excise Duty on Digital Transactions

  • Higher excise duty rates on mobile money, bank transfers, and digital transactions.
  • Digital payment service providers required to comply with updated tax obligations.

8. Environmental & Carbon Taxation

  • New plastic packaging levy introduced to promote sustainability.
  • Discussions on a carbon tax framework to regulate emissions.

9. Minimum Tax & Turnover Tax Adjustments

  • Turnover Tax (TOT) rate adjustments, affecting MSMEs earning below Ksh 25 million annually.
  • Minimum tax provisions revised to reduce tax burdens on struggling businesses.

Related Content

Tax Landscape
Tax Overview
Tax Rates

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