FINANCE BILL 2024 HIGHLIGHTS a-the rejected bill

finance bill

1. FINANCE BILL 2024 HIGHLIGHTS BY HILLARY LUSIGI

2. TAX PROCEDURES ACT Unsupported objections to be deemed disallowed where the tax payer does not provide information within 7days Objection decision to be made within 90 days previously 60 Introduction of validity of one yea agency notice where the agent hasn’t notified the commissioner of inability to pay the said taxes Weekends (Saturday and Sundays) and public holidays not included in time computation Penalty of Ksh 2 million every month for failure to comply with etims.

3. b. INCOME TAX - RESIDENT INDIVIDUAL Motor vehicle tax at the rate of 2.5% of the value of the vehicle minimum being Ksh 5000 and to a maximum of 100,000. Replacement of Digital Service Tax with Significant Economic presence Tax at the rate of 6% WHT on payment of facilitation to freelancers in digital service tax at the rate of 5% for residence and 20% for non-residence Deferment of tax losses from the current 5 years reduced to 3 years. Removal of exemption of infrastructure bonds to 15%

4. INCOME TAX – Corporate Corporation tax   Removal of 20% penalty on non-payment or underpayment of installment taxes Retirement, pension and provident funds no longer required to register with commissioner Withholding tax- removal of threshold of Ksh 24000 p.m. on WHT for residents Income from supply of goods to public entity to be subjected to 5% WHT Introduction of WHT at the rate of 5% on securities with 3-year maturity Royalty definition to include use of transfer of right to use software within definition of royalty Capital gains tax   Exemption from CGT on tax gains derived from transfer of property within SEZ by a licensed developer enterprise o operator Reduction of the CGT rate from 15% to 5% for transfer of certified investments.

5. INCOME TAX – International Tax and Transfer Pricing Minimum top up tax - In line with BEPS(Base Erosion and Profit shifting) 2.0 objectives Minimum Top up Tax is a tax payable by a covered person where the combined income effective tax rate is less than 15% in a year of income. I will cover members whose annual turn over is at least EUR 750 million in at least two of the four years preceding the year of income.

6. INCOME TAX – PAYE Update of per-diem rates from the current Ksh 2000 to an amount not exceeding 5% of the gross earnings where the employer has a policy Increase of pension allowable deduction from Ksh 20,000 to kes 30,000 per month Expansion of tax deductible non cash employment benefit from the current Ksh 36000 to Ksh 48000 per year Exemption from tax any amount paid or granted to a public officer as reimbursement of expenditure incurred Exemption of benefits paid upon retirement age, withdrawal after 20 years and retirement due to ill health. Allowable value of meals increased from 48000 to 60000 per year Deductible interest from mortgage increased from Ksh 300,000 to Ksh 360,000 Social Health Insurance Fund (SHIF) at the rate of 2.75%, Affordable housing levy and post retirement medical scheme.

7. VALUE ADDED TAX General guidelines Threshold of vat registration increased from 5 million to 8 million. Time of supply for exported goods is on possession of the required export confirmation documents No more refunds of credits arising from supplies made by a manufacturer to an official aid funded project No more apportionment of input VAT based on percentage of taxable and exempt supplies Claim of excess input VAT within 6 months down from 24 months Transfer of business as a going concern exempted from VAT   INDUSTRIAL Exemption of solar and wind energy generating equipment   FINANCIAL SERVICES Exemption from vat on financial and insurance services; issuance of credit and debit cards, telegraphic money transfer, foreign exchange transactions, cheque handling -processing and settlement, issuance of securities for money, management and related insurance consultancy services. HEALTH SECTOR Mosquito repellant-exempted Inputs and raw materials used in the manufacture of mosquito repellent -exempted construction and equipping of specialized hospitals with a minimum bed capacity of fifty beds-taxable at 16% BETTING SECTOR Betting, gaming and lotteries services from exempt to 16%

8. VALUE ADDED TAX-CNTD AGRICULTURAL SECTOR Tea packaging material and micro nutrients foliar feeds and bio stimulants(organic)-16% to exempt Agricultural pests control products and materials used in manufacture of agricultural pest control products-zero rate to exempt. Transportation of sugarcane from farms to milling factories zero rated to 16% TRANSPORT SECTOR   Supply of electric motorcycles from zero rated to exempt Inbound international sea freight offered by a registered person zero rated to 16%   TOURISM SECTOR   Local assembled motor vehicle for transportation of tourists-exempt to 16% Taxable goods and services for the construction of tourism facilities, recreational parks of 50 acres or more, convention and conference facilities. MANUFACTURING SECTOR   Plant and machinery used in construction of plastic recycling plant-exempt to 16% Bread-zero rated to 16% Supply of locally assembled and manufactured mobile phones-16%   FILM SECTOR Goods and services used by local film producers -exempt to 16%

9. EXCISE DUTY ACT Removal of excise Duty relief on excisable finished products Payment date of excise Duty on manufactured alcoholic beverages extended from 24 hrs. to 5 working days Excise duty for services offered by non-residents through digital platforms e.g., betting, gaming and advert Excise duty on remission of spirits Excise duty on motor vehicles

10. MISCELLANEOUS FEES AND LEVIES ACT IDF increased from 2.5 to 3% Exemption from IDF and RDL on mosquito repellent Export promotion and investment levy(leather, footwear, denatured alcohol, rum, vodka, furniture) Introduction of eco levy (Data processing mahines,telephone sets with cordless handsets, smartphones, new pneumatic tyres, diapers, dry cells