Kenyans have received relief after the government scrapped several of contentious measures contained in the Finance Bill 2024, which had been expected to be tabled in the National Assembly on Tuesday afternoon.
First on the list of measures dropped due to persistent public outcry was a plan to tax bread, financial services, and foreign exchange transactions at a rate of sixteen percent Value Added Tax.
Following a meeting at State House Nairobi amongst members of parliament affiliated with the ruling Kenya Kwanza coalition led by President William Ruto, the announcement was made.
The Finance Bill 2024 has undergone the following changes:
1. The proposed 16 per cent on bread has been dropped.
2. Excise duty on vegetable oil removed.
3. Transfer of mobile services is a key concern for many Kenyans hence no increase on transaction of mobile phone transfer services. The status quo remains.
4. We proposed that statutory deductions such as Housing Levy, SHIF to be tax deductible and hence allow what is subjected to PAYE is an amount less than what was therebefore so more disposable income.
5. Eco levy will only be tangible to imported finished products. All locally manufactured items including diapers and sanitary towels will not be subject to eco-levy.
6. VAT Threshold; increase from Ksh.5 million to Ksh.8 million hence SMEs that have turnover of less than Ksh.8 million don’t have to register for VAT.
7. eTIMS – Small businesses that have turnover of less than Ksh.1 million should be exempted from eTIMS.
8. Eggs, onions, potatoes, – proposed excise duty only on imported eggs, onions and potatoes hence locally produced to be more marketable.
9. Fight against illicit brew – change in excise duty from volume to alcohol content hence those producing very high alcohol content will pay more excise duty.
10. To support pension contributions: Increase amount allowable for Taxable contributions from Ksh.20,000 to Ksh.30,000 monthly.
11. Money allocated for JSS – hire all 46,000 JSS intern teachers for permanent and pensionable terms. In addition to recruit another 20,000.
12. Motor Vehicle Tax – The motor vehicle tax cannot be amended through Income Tax Act. Pegging it on insurance would cripple the insurance business and hence the proposal has been dropped.
13. Sugarcane Transportation: Remove VAT on transportation of sugarcane from farms to the milling factories.
