Months after thousands of Kenyans took to the streets to protest against the defunct Finance Bill 2024, the government has yet again introduced a raft of tax measures as it seeks to narrow the budget deficit that currently stands at Ksh500 billion.
In its latest Tax Laws Amendment Bill drafted by the National Treasury and introduced in the National Assembly by Majority Leader Kimani Ichung’wah, the government has proposed the introduction of a tax on both local and foreign investors seeking to purchase infrastructure bonds.
The bill seeks the introduction of a 5 per cent tax on interest earned by investors who purchase infrastructure bonds. Infrastructure bonds are government securities sold by the Central Bank of Kenya (CBK) in the form of debt.
The tax amendment bill also proposes an increase in the rate of excise duty for imported sugar from Ksh5 per kg to Ksh7.50 per kg. However, the bill proposes an exemption from tax increases for sugar imported by a registered manufacturer and raw sugar imported for processing by a licensed sugar refinery.
Treasury CS John Mbadi signing for the loan facility, in Beijing on September 6, 2024.
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Treasury
According to the new tax proposal, the government will also impose excise duty on imported electric transformers and certain parts of a vehicle at the rate of 25 per cent.
In the new piece of legislation, Imported printing ink will undergo taxation at the rate of 15 per cent. The tax excludes ink originating from East African Community partner states that meet the East African Community Rules of Origin.
President Ruto’s administration also seeks to introduce a 16 per cent tax on aeroplanes, helicopters, spacecraft, and specially designed locally assembled motor vehicles that are used for the transportation of tourists.
Additionally, the bill also suggests the introduction of a 15 per cent excise duty on fees charged on the internet and social media.
Tax Exemptions
Meanwhile, despite the proposed tax increments on various products and services, the government has also excluded several other commodities from taxation.
In the new tax bill, the government has proposed the exclusion of locally assembled electric vehicles from excise duty to support the local assembling industry and create jobs for Kenyans.
The government has also suggested the exemption from income tax pension payments including gratuity and other payments made from registered pension fund entities such as the National Social Security Fund (NSSF).
The bill also seeks to exempt non-resident contractors, sub-contractors, consultants, or employees involved in the implementation of a project financed through a full grant from paying income tax.
Goods for use in the manufacture of baby diapers, sanitary towels, and tampons are assets to undergo tax exemption if the new tax bill goes through Parliament.
Similarly, imported inputs and raw materials supplied to manufacturers of agricultural pest control products, agricultural pest control products, certain fertilizers, and inputs or raw materials for manufacturing fertilizer would also be exempted from taxation.
The National Treasury building in Nairobi County.
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National Treasury
