Disclaimer: The following insights are based on a draft of the Finance Bill, 2024, currently circulating. Please note that this draft has not yet been confirmed as the official version presented before the National Assembly.
While the official publication of the Finance Bill is pending, we’ve summarized the key proposed changes outlined in the current draft:
Income Tax Act:
– Introduction of a one percent (1%) motor vehicle tax payable upon issuance of insurance cover.
– Withholding tax on goods supplied to public entities at rates of three percent (3%) for residents and five percent (5%) for non-residents.
– Taxation of income from digital marketplace operations and digital content monetization.
– Repeal of Digital Service Tax in favor of Significant Economic Presence Tax.
– Introduction of minimum top-up tax for certain resident entities within multinational groups.
– Deductibility of contributions to medical funds and the affordable housing levy.
– Investment deduction for capital expenditure on spectrum licenses.
– Taxation of interest income from infrastructure bonds for resident persons.
Value Added Tax (VAT) Act:
– VAT application on certain financial services such as credit and debit card issuance, telegraphic money transfers, and foreign exchange transactions.
– Increase of VAT registration threshold to Kenya Shillings eight million (KES 8,000,000).
– Exemption of transfer of business as a going concern from VAT.
– Limiting VAT exemption on insurance and reinsurance premiums.
– Application of VAT on betting, gaming, and lotteries services.
– Removal of VAT exemptions in the tourism, manufacturing, and construction sectors.
Excise Duty Act:
– Introduction of excise duty on services offered in Kenya by non-residents through digital platforms.
– Increase of excise duty on money transfer services to twenty percent (20%).
– Extension of payment timeline for excise duty by licensed alcoholic beverage manufacturers.
Tax Procedures Act:
– Extension of timeframe for KRA to issue objection decisions to ninety days.
– Exclusion of weekends and public holidays when determining statutory timelines under tax laws.
– Empowerment of KRA to direct taxpayers to integrate their systems with KRA’s system.
Miscellaneous Fees and Levies Act:
– Reduction of Export and Investment Promotion Levy rates, with an expanded list of applicable items.
Please note that these are proposed changes subject to confirmation and enactment.