The Finance Bill 2023 Kenya

The Finance Bill 2023 in Kenya aims to introduce amendments to various tax and duty-related laws with the objective of increasing government revenue through taxation. The bill is currently being reviewed by the National Assembly, and it encompasses several key changes that are worth noting:

  1. Income Tax:
    • The turnover tax (TOT) rate is proposed to be increased from one to three percent.
    • Micro-businesses with a turnover of at least KES 500,000 annually (previously KES 1,000,000) will be included in the tax net.
    • Businesses with turnovers above KES 15 million will be subject to income tax at a rate of 30 percent.
  2. Digital Assets Tax:
    • A three percent levy on transfer charges will be introduced for digital assets such as cryptocurrencies, digital currencies, and non-fungible tokens (NFTs).
  3. Taxation of Member Clubs:
    • Member-based clubs or trade associations will now be subject to tax on their business income, excluding joining fees, welfare contributions, and subscriptions.
  4. Withholding Tax for Digital Content Creators:
    • Fifteen percent of payments made to digital content creators will be withheld as withholding tax.
  5. New Tax Band for High-Income Earners:
    • A new pay-as-you-earn tax band of 35 percent will be introduced for individuals with a gross monthly income above KES 500,000 or KES 6 million annually.
  6. 3% Housing Levy Deductions:
    • A new statutory deduction of three percent of gross earnings will be introduced into the National Housing Development Fund.
  7. Value-Added Tax (VAT):
    • VAT on petroleum products is proposed to be increased from eight percent to 16 percent.
    • Imported digital service providers will be required to register for VAT, removing the previous turnover threshold of KES 5 million.
    • VAT exemptions will be granted for diagnostic and laboratory reagents, vaccines for human and veterinary medicine, aircraft and spacecraft parts.
  8. Excise Duty:
    • Timely excise duty payments will be required for certain industries, such as gaming, within 24 hours.
    • Excise duty will be introduced on cosmetics, including human hair, wigs, false beards, eyebrows, eyelashes, and artificial nails, at a rate of five percent.
    • Increased excise duty rates will apply to mobile money transfer services, gaming, betting, price competitions, and lotteries.
  9. Tax Appeals Tribunal:
    • Taxpayers challenging decisions of the Tax Appeals Tribunal will be required to deposit 20% of the disputed tax amount at the Kenya Revenue Authority (KRA) or provide equivalent security before proceeding to the High Court.
  10. Tax Procedures Act:
  • The KRA will no longer grant relief due to doubt or difficulty in tax recovery, potentially leading to a more assertive tax authority.
  1. Miscellaneous Fees & Levies Act:
  • The import declaration fee is proposed to be revised from 3.5 percent to 2.5 percent.
  • The Railway Development Levy (RDL) is proposed to be reduced from 3.5 percent to 2.5 percent.

It is essential to consult the official Finance Bill 2023 document or seek professional advice for precise and up-to-date information on the proposed changes and their implications.

 

Download the Finance bill from the Kenyan Pariament Website