"Kenya's 2025 Tax Changes: What Your Business Needs to Know"

As we navigate through 2025, Kenyan businesses face several significant tax regulatory changes that require immediate attention and strategic planning. At Grohney AAA LLP, we've been closely monitoring these developments to help our clients stay compliant while optimizing their tax positions.Key Tax Changes for 2025Digital Service Tax (DST) Expansion The Kenya Revenue Authority (KRA) has expanded the scope of Digital Service Tax to include more online platforms and digital marketplaces. Businesses earning income from digital services must now register for DST if their annual turnover exceeds KES 1 million.VAT Rate Adjustments Several sectors have seen VAT rate modifications, particularly in the technology and renewable energy sectors. Solar equipment and energy-efficient appliances now qualify for reduced VAT rates of 8%, down from the standard 16%.Turnover Tax Modifications Small businesses with annual turnover between KES 1 million and KES 50 million can now benefit from simplified turnover tax calculations. The rate remains at 1% but with improved deduction allowances.Compliance RequirementsEnhanced Record Keeping KRA now requires digital record-keeping for all businesses with annual turnover exceeding KES 5 million. This includes integration with KRA systems through approved Electronic Tax Register (ETR) systems.Quarterly Returns Medium-sized businesses must now file quarterly returns instead of annual returns, improving cash flow management but requiring more frequent compliance attention.Strategic Planning OpportunitiesTax Incentives for Green Investments Businesses investing in renewable energy or environmental conservation projects can claim accelerated depreciation allowances and tax credits up to 150% of qualifying investments.Export Processing Zones (EPZ) Benefits New incentives for EPZ businesses include reduced corporate tax rates and extended tax holidays for qualifying manufacturing operations.Action Steps for BusinessesConduct a Compliance Audit: Review your current tax position and identify areas requiring immediate attention.Update Record-Keeping Systems: Ensure your accounting systems meet new digital requirements.Review Tax Planning Strategy: Assess opportunities for legitimate tax optimization under new regulations.Staff Training: Ensure your finance team understands new compliance requirements.How Grohney AAA LLP Can HelpOur tax experts provide comprehensive support including:Tax compliance audits and health checksDigital system integration guidanceStrategic tax planning consultationsKRA liaison and representationStaff training on new requirementsDon't let tax compliance become a burden on your business growth. Contact us today for a free consultation on how these changes affect your specific situation.