Kenya Finance Bill 2025 Raises Aviation Sector Costs

Kenya’s aviation sector is expected to face rising operational costs following the passage of the Finance Bill 2025, which reinstates value-added tax (VAT), Import Declaration Fees (IDF), and the Railway Development Levy (RDL) on aircraft, spare parts, and maintenance services.

The Kenya Association of Air Operators (KAAO) has strongly opposed the bill, warning that the new tax measures could hinder sector recovery, reduce competitiveness, and discourage investment. The industry, still rebounding from the impact of COVID-19, could also see slower growth in air connectivity and related economic development.

On June 19, Kenya’s parliament passed the bill, though it rejected a provision that would have granted the revenue authority unrestricted access to taxpayer data, citing privacy and constitutional rights. The government, under pressure to increase revenues, has faced public backlash over tax proposals. Last year, widespread protests against tax hikes led to over 60 deaths and forced President William Ruto to abandon a KES 346 billion (USD 2.7 billion) revenue plan.

Ahead of the bill’s passage, KAAO submitted a memorandum to the National Assembly Committee on Finance and Planning, urging lawmakers to maintain existing VAT exemptions for the aviation industry. The association argued that removing these exemptions would raise the cost of aircraft acquisition, maintenance, and essential services.

In a May 20 statement, KAAO emphasized that the changes would negatively impact not only commercial aviation, but also cargo transport, flight training, unmanned aerial vehicles (UAVs), and emergency response services across Kenya.

Related News: https://airguide.info/category/air-travel-business/airline-finance/

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com