Summary Of The Key Proposed Changes In The Finance Bill 2024

 


Income Tax Act:

• Introduction of Motor Vehicle Tax at 2.5% of the vehicle value payable upon insurance issuance.

• Withholding tax on goods supplied to public entities at 3% for residents, 5% for non-residents.

• Taxation of income from digital marketplaces/platforms at 20% for non-residents, 5% for residents.

• Introduction of Significant Economic Presence Tax at 30% for non-residents.

• Minimum top-up tax for resident entities in multinational groups.

• Deductibility of SHIF, post-retirement medical funds, and the affordable housing contributions.

• Investment deduction for spectrum license purchase at 10%.

• An eco levy for manufacturers and importers will be introduced.

• Imported motorcycles beyond a certain price will be taxed at 10% of value instead of a flat rate.

• Taxation of interest income from infrastructure bonds for residents.

Value-Added Tax Act:

• VAT exemptions on bread will be removed.

• Removal of VAT exemptions for financial services such as credit and debit card issuance, money transfer services, foreign

exchange transactions, cheque processing, issuance of securities, and assignment of debt..

• The VAT registration threshold will increase from KES 5 million to KES 8 million.

• Exemption of transfer of business as a going concern from VAT.

• Limitation of VAT exemption on insurance premiums.

• Application of VAT on betting, gaming, and lotteries services.

• Removal of VAT exemptions in tourism, manufacturing, and construction sectors.

Excise Duty Act:

1. Excise duty on financial and telecom services will remain at 15% for money transfer services and at 12.5% for betting and gaming.

2. A 20% excise duty on fees charged by digital lenders and banks will be maintained.

3. Excise duty on digital services offered by non-residents will be 20%.

4. Excise duty on money transfer services will increase from 15% to 20%.

5. Automatic inflation adjustment of excise duty rates will be repealed.

6. Excise duty payment timelines for alcoholic beverage manufacturers will be extended from 24hrs to 5 working days.

7. Tariff classification in the Excise Duty Act will align with the East African Customs Union Protocol.

Tax Procedures Act:

1. KRA will be granted powers to enforce eTIMs integration with penalties for non-compliance.

2. The bill grants KRA certain exemptions to data protection laws for tax assessment and collection purposes.

3. New powers will allow KRA to demand agents deduct unpaid taxes owed by taxpayers.

4. KRA’s timeframe for issuing objection decisions will increase from 60 to 90 days.

5. KRA will have power to refrain from recovering unpaid tax under certain conditions.

6. Weekends and public holidays will be excluded when determining statutory tax law timelines.

7. KRA can direct taxpayers to integrate their systems with KRA’s system for real-time document submission.

Miscellaneous Fees and Levies Act:

• Reduction of Export and Investment Promotion Levy rates.

• Expansion of items subject to the levy.


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