Nairobi, Kenya – The National Treasury has reignited a contentious proposal in the Draft Finance Bill 2025, seeking to grant the Kenya Revenue Authority (KRA) access to personal data held by businesses.
This move aims to expand the country’s tax base by enabling real-time monitoring of transactions across various sectors, but it has raised concerns about privacy and data security.
The proposed amendment seeks to scrap Section 59A(1B) of the Tax Procedures Act, which currently prevents the KRA from demanding integration with business systems containing personal or sensitive customer information.
If enacted, this would allow the taxman to obtain transactional data—including private customer details—from businesses in real-time, sparking fears over privacy violations.
In its previous iteration, the Tax Law (Amendment) Act 2024 allowed the KRA to integrate its systems with corporate entities, including banks, but explicitly barred access to trade secrets and personal customer data.
The latest proposal, however, seeks to remove this safeguard, which could grant the KRA unfettered access to sensitive information without a court-issued warrant.
Critics argue that the move could infringe on individuals’ privacy rights, with civil society organizations such as the Law Society of Kenya (LSK) and Amnesty International Kenya voicing their concerns about the constitutionality of the proposal.
These groups have previously labeled similar provisions as a threat to privacy, urging the government to reconsider its approach.
In 2024, a similar attempt to amend the Data Protection Act, 2019 was rejected by the National Assembly’s Finance Committee, which noted that the proposal might conflict with Kenya’s constitution and the right to privacy.
The National Treasury argues that the proposal is a necessary step to boost revenue collection, enhance tax enforcement, and reduce tax evasion.
By granting the KRA access to real-time transaction data, the government aims to plug loopholes and catch tax cheats, helping to raise an estimated KSh 302 billion in additional revenue.
In addition to the data access provisions, the Bill proposes to reinstate the powers of the Cabinet Secretary for the National Treasury to waive penalties or interest on tax liabilities arising from system errors or delays in data updates.
The government contends that such waivers will improve compliance and address issues related to electronic tax system malfunctions.
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The Finance Bill 2025 also includes significant changes to the Value Added Tax (VAT) system.
It proposes the reclassification of several products and services from VAT zero-rated to VAT-exempt, including raw materials for pharmaceutical manufacturers and the transport of sugarcane.
Under the zero-rated system, businesses can claim refunds on VAT paid for inputs, but with the new classification, this benefit would be lost, increasing production costs and potentially leading to higher prices for consumers.
Further, the Bill introduces new penalties for businesses that purchase or import VAT-exempt or zero-rated goods but later use them in ways that violate their tax classification.
This is part of a broader effort to tighten VAT compliance and improve tax revenues.
This proposal is likely to face significant public backlash, as it did last year when similar provisions in the Finance Bill 2024 sparked protests and violence.
The public’s anger led to the breach of Parliament’s walls, and civil rights groups argued that the government was overreaching in its attempt to access personal data.
Despite these challenges, the Treasury remains determined to pursue reforms it believes will enhance tax collection and reduce informal economy activities.
As the Finance Bill 2025 moves through Parliament, the government faces tough scrutiny, particularly over the privacy implications of granting the KRA real-time access to personal data.
While proponents argue that this will streamline tax enforcement and help close revenue gaps, critics insist that it risks compromising Kenya’s data protection standards and undermining public trust.
