List Of New Taxes William Ruto's Govt Proposes In Finance Bill 2024, Their Implications

• The National Treasury proposed a raft of new taxes in the Finance Bill 2024 to finance the 2024/25 fiscal year budget
• In the proposals, Kenyans owning a car will have to pay 2.5% of the vehicle value, and those supplying goods to public entities will part with 3%-5%, among other taxes.
• If approved by the National Assembly after the public participation exercise, the new taxes will take effect on July 1, 2024

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

The Finance Bill 2024 is out and yet to be presented for public participation before parliament approves it in June 2024.

The National Treasury proposed a raft of new taxes that will finance the 2024-25 fiscal year budget.

Among the taxes proposed by Treasury Cabinet Secretary Njuguna Ndung'u are 2.5% of the value of motor vehicles and 3% withholding tax on goods supplied to public entities, among others.

Should these proposals come to light, Kenyans will be forced to dig deeper into their pockets starting July 1, 2024.

List of new taxes in Finance Act 2024, their impact

1. Motor Vehicle ownership tax

The Bill proposes a 2.5% tax on the value of motor vehicles, payable by owners at the time of issuance of an insurance cover.

The tax shall not be less than KSh 5,000 and not exceed KSh 100,000, determined based on make, model, engine capacity, and year of manufacture.

Insurance companies who will not collect and remit the tax risk a penalty of 50% of the tax and the actual amount of the uncollected tax.

Ambulances or motor vehicles owned by the national government, county governments, Kenya Defence Forces, National Police Services, and National Intelligence Services shall be exempt from this tax.

According to Bowmans, the bill does not state who will pay the car valuation fee, a fact that could see insurers pass the burden to car owners.

2. Withholding tax on public supplies

President William Ruto's administration seeks to collect a 3% withholding tax from Kenyans who supply goods to public entities.

Non-resident persons will pay a 5% withholding tax for supplying goods to state agencies.

"The public entity shall deduct withholding tax at the rate of 3% of the payment made to a resident person and 5% of the payment to a nonresident person," read the Finance Bill 2024 in part.

This could see suppliers of goods to public entities increase the price to match the withheld tax, Bowmans wrote.

3. Digital marketplace income tax

The Bill proposes the introduction of tax withheld by owners or operators of digital marketplaces or platforms.

It states that owners of these platforms should deduct 5% of income paid to Kenyans and 20% of income paid to non-residents and deemed to be derived from the country.

The tax poses a compliance burden to non-residents who may not derive income from Kenya when facilitating payment for a resident person.

4. Economic presence tax

The Treasury proposes a repeal of the 1.5% digital service tax and the introduction of an economic presence tax.

The significant economic presence tax will be payable by a non-resident person whose income from digital services is accrued in Kenya.

The person will pay 30% of the deemed taxable profit, which will be 20% of the gross turnover.

The services subject include ride-hailing services, food delivery services, freelance services, professional services, rental services, and task-based services.

A non-resident person who offers services through a permanent establishment, carries on the business of transmitting messages by cables, radio, optical fibre, television, internet, satellite, or other similar methods in Kenya, or whose income is subject to withholding taxes will not pay this tax.

5. Infrastructure Bond tax

The government has proposed the introduction of a 5% withholding tax on infrastructure bonds.

Income earned by resident persons from all listed bonds, notes and other similar securities from IFBs, which used to be tax-exempt, will be subject to this tax.

This is seen as an attempt by the government to subject to interest income paid to resident retail investors, who have developed an interest in IFBs in the recent past, and increase the tax base.

Which other tax changes are proposed in Finance Bill 2024?

The Bill further proposes changes and updates in taxes to raise funds for the Kenya Kwanza's administration economic development.

Treasury proposes increasing the excise tax on betting stakes from 12.5% to 20%.

Betting firms will also pay 15% of gross gaming revenue as taxes and a 1% monthly income levy to the Kenya Revenue Authority(KRA).

What to know about Finance Bill 2024 taxes

• Finance Bill 2024 proposes an increase in the excise duty rate on fees for money transfer services provided by banks, money transfer agencies, and other financial service providers.
• If the Bill passes, employees will receive 15% relief on the affordable housing levy, reducing the tax paid by each worker.

Proofreading by Nyambura Guthua, journalist and copy editor at TUKO.co.ke

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Njuguna Ndung'u proposed a raft of new taxes to finance President Ruto's 2024/25 budget.

List of New Taxes William Ruto's Govt Proposes in Finance Bill 2024

List of New Taxes William Ruto's Govt Proposes in Finance Bill 2024