By Yvonne Idamano
Article no. 7
Over the past few weeks, the Finance Bill 2024 has been the talk of the town. Why, you ask?
This is because if the bill passes through parliament, it signifies the need for Kenyans to tighten
their belts further, as though it is not tight enough already. The government has justified this
move by stating that it aimed to widen the tax base to meet projected budget revenues for the
new financial year, 2024/2025. With knowledge of how parliament works today, it is undeniable
that the bill will sail through. We might as well verse ourselves with what the finance bill
contains.
The newly introduced tax acts are quite a number, but only a few will be highlighted to give a
glimpse of what awaits. These are classified into income tax acts, the value-added tax, and the
excise duty acts.
First, the Income Tax Act has a few proposals, which include:
* Motor vehicle tax: This proposes introducing a rate of 2.5% annual tax on the value of the
motor vehicle, which is payable at the time of issuance of insurance cover for motor vehicles.
The deduction is a minimum of Ksh.5,000 and a maximum of Ksh.100,000.
* There is also taxation of income from Kenyans operating and earning from a digital
marketplace or platform and digital content monetization. The taxation of a resident who owns or
operates a digital platform is 5%, and that of a non-resident is 20%, which is to be known as
Economic Significant Presence Tax, a calculation of their gross turnover.
* The bill also proposes contributing to the Social Health Insurance Fund, post-retirement
medical fund, and the affordable housing levy deductible expenses in computing the taxable
income of a contributor.
* The taxation of family trusts. The bill also proposes to subject the income of a registered
family trust to taxation.
The value-added tax is not limited to the following:
* It proposes removing the VAT exemption of the following items, which will be chargeable at
the standard rate currently set at 16%. These include:
* Issuing of credit and debit cards.
* Foreign exchange transactions, such as the supply of foreign drafts and international money
orders.
* Cheque handling, processing, clearing, and settlement, including special clearance or
cancellation of cheques, has not been spared.
* VAT on betting, gaming, and lottery services have also been introduced.
* The 16% VAT proposed on bread, causing a lot of uproar all over the country, would cause a
significant Sh.10 rise in the cost of what is a staple breakfast for most Kenyan households.
The excise duty proposal rate is 20% and would apply to:
* Telephone and internet data services have been raised to 20% from 15% in the new finance
bill.
* Fees charged for money transfer services by banks, money transfer agencies, and other
financial service providers have been raised from 15% to 20%.
The above-mentioned proposals are just a few that I highlighted to give a glimpse of what awaits
us. It is time we educate ourselves because it will affect us directly or indirectly. Buckle up,
Kenyans, as another tough financial year awaits.
