The government through the Ministry of Treasury has announced plan to re-introduce several tax measures that were in the controversial Finance Bill 2024 that was rejected by Gen Zs.
According to reports, the tax measures will be consolidated into three new bills that will be tabled before Parliament: Tax Laws (Amendment) Bill, 2024, Tax Procedures (Amendment) Bill, 2024 and Public Finance Management (Amendment) Bill, 2024.
Treasury CS John Mbadi said that the new bills would spur economic growth and assist in bridging the fiscal deficit through enhanced revenue collection and has written a two-page explainer on the local dailies to provide a detailed account of the new proposals.
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Expand the Digital Marketplace: Much like the Finance Bill, the Tax Laws (Amendment) Bill, 2024 will seek to amend Section 3 of the Income Tax Act to include more digital operators into the tax bracket including food delivery services, professional services, freelance services, rental services and ride-hailing services.
Minimum Top Up tax: The Tax Laws (Amendment) Bill, 2024 also seeks to introduce the minimum top up tax. This is a new measure that will ensure multinational companies operating in Kenya pay a minimum tax rate of 15 per cent.
Pension contributions to increase to Ksh.30,000 monthly: The limit for pension contributions will be increased from Ksh.240,000 per year to Ksh.360,000. This translates to Ksh.30,000 monthly for both the employee and the employer.
Introduction of withholding tax on goods supplied to public entities: The bill will also introduce a withholding tax on goods supplied to a public entity (such as a government office) at a rate of 0.5 per cent to a resident person and 5 per cent for non-resident.
Economic Presence Tax: The bill further seeks to introduce the Significant Economic Presence Tax that will be subjected to non-resident people who earn an income from the digital marketplace with digital operators paying a tax rate of 6 per cent up from 1.5%
Infrastructure bonds to be taxable: In the past, infrastructure bonds have attracted interest from investors due to their tax-free status with proposal of a 5 per cent tax rate from interest accrued from infrastructure bonds.
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Make KRA PIN Mandatory for Kenyans working remotely: Another clause in the repealed Finance Bill that is set to make a comeback is the mandatory requirement of KRA PIN for Kenyans working remotely.
Affordable Housing, SHIF tax deductible: Contributions made to the Housing Levy and the Social Health Insurance Fund (SHIF) will now be tax deductible should the Tax Laws (Amendment) Bill, 2024 pass guaranteeing insurance reliefs from both contributions hence reducing the amount taxable from one’s income.