Kenya Finance Bill 2024 Amendments Address Public Concerns
In a significant turn of events at State House Nairobi, the Finance and Planning Committee has announced substantial revisions to the Finance Bill 2024, following public outcry and intense negotiations among key stakeholders.
The amendments, announced by Committee Chair Kimani Kuria, aim to alleviate burdens on Kenyan citizens and businesses, reflecting a responsive approach to public feedback.
Among the key changes introduced are:
VAT on Bread and Essential Goods: The proposed 16% VAT on bread has been completely dropped, along with plans to increase taxation on mobile phone transfers and bank transactions. Additionally, locally manufactured items, including diapers and sanitary pads, are now exempt from the Eco Levy.
Turnover Tax and VAT Threshold: The VAT registration threshold has been raised from 5 million to 8 million Kenyan Shillings. Small and medium enterprises (SMEs) with an annual turnover below 8 million will no longer be required to register for VAT, easing compliance for smaller businesses.
eTIMS Exemptions: Businesses with a turnover below 1 million, such as small-scale avocado farmers, will be exempted from the Electronic Tax Invoice Monitoring System (eTIMS) registration, acknowledging the unique challenges faced by micro-enterprises.
Custom Duties on Agricultural Products: Excise duty will now only be applied to imported table eggs, onions, and potatoes, sparing local farmers from additional financial burdens on their produce.
Alcohol Taxation Reform: A shift from volume-based to alcohol content-based taxation for alcoholic beverages has been introduced. This reform targets manufacturers of high-alcohol content beverages, who will now face higher duties commensurate with the alcohol content of their products.
Pension Contributions: To encourage savings, the allowable tax exemption for pension contributions has been raised from 20,000 to 30,000 Kenyan Shillings per month, providing individuals with greater incentives for retirement planning.
Employment Security for JSS Teachers: In a move towards enhancing employment stability, all 46,000 Junior Secondary School (JSS) teachers will be hired on permanent and pensionable terms. Additionally, plans are underway to recruit an additional 20,000 teachers, addressing long-standing concerns in the education sector.
Motor Vehicle Tax: The controversial motor vehicle tax proposal has been scrapped entirely, providing relief to vehicle owners and industry stakeholders alike.
Support for Sugarcane Farmers: Value-added tax on the transportation of sugarcane from farms to milling factories has been removed, aiming to support the struggling sugarcane sector and rural livelihoods dependent on sugarcane farming.
These amendments come amidst visible tensions between political figures and robust deliberations within the government, underscoring the responsiveness of policymakers to the concerns voiced by Kenyan citizens and various interest groups. The Finance and Planning Committee’s decision reflects a balance between fiscal responsibility and socio-economic considerations, aiming to stimulate economic growth while safeguarding the welfare of all sectors of society.
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