NAIROBI — Kenya’s legal and financial watchdogs have come out strongly against proposals in the Finance Bill 2025 that would give the Kenya Revenue Authority sweeping new powers to access private data and hold tax defaulters’ spouses personally liable.
The Law Society of Kenya (LSK), alongside audit firms KPMG East Africa, Ernst & Young, and CDH Law, voiced their objections in public submissions to the National Assembly’s Finance and Planning Committee on Thursday.
At the heart of the backlash is a clause that would allow KRA to automatically access taxpayers’ personal and commercial data, including trade secrets — even while appeals against tax rulings are ongoing.
“This undermines the right to due process,” said LSK in its memorandum. “A taxpayer must be allowed a fair hearing before such drastic action is taken.”
Audit giant KPMG agreed. “Issuing agency notices while a dispute is still in court breaches the principle of natural justice,” its representatives told the committee.
Another proposal, even more contentious, would make spouses of tax defaulters jointly liable for unpaid taxes. Critics called the clause “dangerous” and “legally indefensible.”
“Someone seeking credit or conducting business is engaged in a personal venture,” LSK argued. “The idea of transferring liability to a spouse violates the very foundations of personal financial responsibility.”
The clause was unanimously rejected by all stakeholders who appeared before the committee this week.
In another section of the bill, Clause 50b proposes to stretch the time allowed for KRA to process tax refunds. If passed, the revenue authority would have up to 120 days to assess claims and 180 days to review them an increase of two months on current limits.
Businesses are worried this could worsen cash flow pressures in an already sluggish economy.
“This delays critical funds that businesses rely on, especially SMEs,” said an Ernst & Young official. “It could dampen investment and restrict liquidity.”
The LSK also took aim at the proposed removal of a 15% income tax rebate for developers who construct at least 100 residential units annually. That incentive, introduced in 2017 to boost affordable housing, had offered companies an alternative to the 30% corporate tax.
“Scrapping the rebate could stifle housing investment and harm the government’s own agenda on affordable housing,” the society said.
In response, Finance Committee Chairman Kuria Kimani assured the public that all views would be weighed carefully. “We will consider your submissions as presented,” he said.
The Finance Bill 2025, expected to be tabled for debate in Parliament next month, comes at a time when the government is under pressure to raise revenue without stifling growth. Public hearings on the bill are being held alongside consultations on the proposed Virtual Assets Providers Bill, which aims to tax digital currencies and crypto platforms.
With growing scrutiny of Kenya’s fiscal strategy, the coming weeks will test the delicate balance between plugging revenue gaps and protecting civil liberties.
