Major Win for Kenyans as Gov’t Removes Controversial Tax Proposals in Finance Bill 2024.

Kenyans have been granted relief after the government dropped a raft of controversial proposals contained in the Finance Bill 2024, set to be tabled in the National Assembly on Tuesday afternoon.

Following sustained public pressure, the government has withdrawn several key proposals. Top among these was a plan to impose a 16 percent Value Added Tax (VAT) on bread, financial services, and foreign exchange transactions.

The announcement was made after a meeting of members of parliament allied with the ruling Kenya Kwanza coalition, led by President William Ruto, at State House Nairobi.

Here is a list of the changes made to the Finance Bill 2024:

1. VAT on Bread: The proposed 16 percent VAT on bread has been dropped.
2. Excise Duty on Vegetable Oil: This has been removed.
3. Mobile Services: No increase in transaction fees for mobile phone transfer services; the status quo remains.
4. Statutory Deductions: Proposals to make statutory deductions such as Housing Levy and SHIF tax-deductible, allowing for more disposable income.
5. Eco Levy: This will only apply to imported finished products. Locally manufactured items, including diapers and sanitary towels, will not be subject to the eco-levy.
6. VAT Threshold: Increased from Ksh. 5 million to Ksh. 8 million, exempting SMEs with a turnover of less than Ksh. 8 million from registering for VAT.
7. eTIMS: Small businesses with a turnover of less than Ksh. 1 million will be exempt from eTIMS.
8. Excise Duty on Produce: Excise duty will apply only to imported eggs, onions, and potatoes, making locally produced items more marketable.
9. Illicit Brew: Excise duty will change from volume-based to alcohol content-based, with higher duties for high-alcohol-content products.
10. Pension Contributions:  The allowable amount for tax-deductible pension contributions will increase from Ksh. 20,000 to Ksh. 30,000 monthly.
11. JSS Employment: Funds allocated to hire all 46,000 JSS intern teachers on permanent and pensionable terms, with an additional recruitment of 20,000 teachers.
12. Motor Vehicle Tax: The proposal to amend the motor vehicle tax through the Income Tax Act has been dropped to avoid crippling the insurance business.
13. Sugarcane Transportation: VAT on the transportation of sugarcane from farms to milling factories will be removed.

Conclusion

The removal of these controversial tax proposals in the Finance Bill 2024 reflects the government’s responsiveness to public concerns and pressures. These changes are expected to alleviate the financial burden on Kenyans, support local businesses, and enhance disposable income, ultimately contributing to a more favorable economic environment.

Article By Suzy Nyongesa.