The Division of Revenue Bill, 2025 is prepared in accordance with Article 218 of the Constitution to provide for the equitable division of nationally raised revenue between the national and county governments for the FY 2025/26. This Bill ensures that both levels of government receive adequate resources to fulfil their respective mandates and facilitate effective service delivery to its citizens. It also considers public debt obligations, economic conditions, and national priorities, ensuring a balance between fiscal sustainability and the resource needs of both levels of government. Furthermore, the Bill outlines mechanisms for addressing revenue shortfalls or surpluses, ensuring that the national government absorbs any revenue deficits while any surpluses are used for debt repayment or fiscal adjustments while aligning with Kenya’s economic strategy.
Chapter eleven of the Constitution of Kenya 2010 establishes a two-tier government, National and County governments, and provides specific functions for each level. Article 187 (2)(a) requires that, if a function is transferred, arrangements should be put in place to ensure that the resources necessary for the performance of the function or exercise of the power are transferred. Further, Article 202 provides that revenue raised nationally shall be shared equitably between both levels and that; county governments may be given additional allocations from the national government’s share of the revenue, either conditionally or unconditionally.
It is against this background, that the National Treasury prepares a Division of Revenue Bill annually, while taking into consideration the recommendations of the Commission on Revenue Allocation and the Intergovernmental Budget and Economic Council, as provided for by Section 12 (h) of the Public Finance Management Act, 2012. Further, Section 191 (1) of the Public Finance Management Act 2012 requires the Cabinet Secretary to submit the Bill to Parliament for review and consideration.
This memorandum details our key submissions in the Division of Revenue Bill 2025 for FY 2025-26.
