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On June 26, 2025, President William Ruto signed three critical financial laws of Kenya's money matters for the next year. These are

  1. Finance Act 2025

  2. Appropriations Act 2025

  3. Supplementary Appropriations Act 2025

Let’s break it down.

📕 1. Finance Act 2025: How the Government Plans to Get Money

This law sets out how the government will collect revenue (money) from taxes, levies, and duties in the 2025/26 financial year.

🧾 Key Tax Changes You Should Know:

  • Per Diem (daily allowance) Tax-Free Limit Increased

    • Previously: Ksh 2,000 per day

    • Now: Ksh 10,000 per day
      Great news for civil servants and people who travel for work—more of your travel allowance is now tax-free!

  • Employers Must Apply Tax Reliefs Automatically
    If you're eligible for NHIF, NSSF, insurance reliefs, etc., your employer must now apply them without you having to ask.

  • Digital Assets Tax Removed—But...
    The government scrapped the controversial Digital Assets Tax (which taxed crypto and NFTs). But now, virtual asset providers (like crypto platforms) will be charged a 5% excise duty on their transaction fees.

  • More Withholding Taxes

    • Payments from public entities will now be taxed at the source.

    • Selling scrap metal? You’ll now face a 5% tax at the point of sale.

  • VAT Rules Tightened

    • You must now issue electronic invoices if you're a VAT-registered business.

    • VAT refunds must be processed within 12 months, not 24.

  • Transfer Pricing Rules for Big Companies
    Large multinationals must now report how they shift profits across borders. This helps stop tax avoidance.

📌 Who's Affected?

  • Employees: Less tax on travel money.

  • Freelancers and Crypto Users: Fewer direct taxes, but platforms will increase charges.

  • Digital Companies (Netflix, YouTube ads, etc.): New tax rules apply.

  • Businesses: Stricter VAT and record-keeping requirements.

📘 2. Appropriations Act 2025: Where the Government Will Spend Money

Once the government collects taxes, the Appropriations Act tells us how that money will be spent.

💰 What’s in the Ksh 3.3 Trillion Budget?

  • Ksh 1.8 Trillion – For recurrent expenditure (day-to-day running of government, salaries, admin).

  • Ksh 744 Billion – For development projects (roads, dams, hospitals, etc.).

  • Ksh 671 Billion – From Appropriations-in-Aid (income from government agencies).

🏙️ Sector Priorities:

  • Education: Funding CBC reforms, school capitation, and teacher recruitment.

  • Health: Rolling out Universal Health Coverage (UHC), building health facilities.

  • Infrastructure: Roads, energy, and water projects.

  • Security: Improving police, military, and disaster preparedness.

🗺️ County Impact:

Each county gets part of this budget, especially for devolved functions like

  • Health

  • Early childhood education

  • County roads

  • Agriculture

Counties that perform better in revenue collection and service delivery may receive more in project allocations.

📗 3. Supplementary Appropriations Act 2025: Mid-Year Budget Adjustments

This law helps reallocate money for the current financial year (2024/25) before it ends.

🛠️ Why Was It Needed?

Sometimes, the government starts the year with one plan but needs to change direction based on

  • Droughts

  • Emergencies

  • Project delays

  • New policy priorities

🧮 What Changed?

  • More funds moved to priority areas like:

    • Education (CBC classrooms, scholarships)

    • Health (NHIF/UHC reforms)

    • Social protection programs

  • Reduced spending on:

    • Foreign trips

    • Low-priority infrastructure

    • Non-performing projects

🎯 Real-Life Impact:

  • Citizens in counties with stalled hospitals or school programs might now see completion.

  • Some roads and flashy national projects may be delayed in favor of feeding programs and bursaries.

🚨 Why Should You Care?

Whether you're a boda rider, an online seller, a teacher, or a county resident, these laws touch your pocket directly or indirectly.

  • You may pay more (or less) tax, depending on what you do.

  • Your county’s roads, clinics, and bursaries depend on how well national funds are shared.

  • Businesses must stay alert to new tax rules, especially if dealing with digital, crypto, or public entities.

✍️ Final Thoughts

The 2025 financial laws are a mix of good news and tight rules. The government is trying to raise money without angering the public, especially after the uproar around tax protests in past years.

But as always, the true impact depends on how well these laws are implemented and whether the funds reach the ground.

Citizens should stay informed, ask questions, and hold leaders accountable. ACCOUNTABILITY!

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