The government has made major changes on key tax proposals to foot its 2024/2025 budget.
In a press briefing on Tuesday, by the Finance Committee of the National Assembly briefing the Kenya Kwanza Parliamentarian Group revealed that the taxes have been scrapped to accommodate the views of Kenyans who have made their frustrations known for few weeks now in social media as well as their views on media.
Among the taxes which have been scrapped includes 16 per cent Value Added Tax (VAT) on bread, transportation of sugar, financial services and foreign exchange transactions.
Also, there will be no increase on mobile money transfer as earlier proposed, 2.5 per cent Motor Vehicle Tax has also been removed. Excise duty on vegetable oil removed.
Levies on the Housing Fund and Social Health Insurance will become income tax deductible. This means the levies will not attract income tax, putting much more money in the pockets of employees.
It is crucial to point out that Eco Levy is being levied on imported finished products. Locally manufactured products will, therefore, not attract the Eco Levy. Locally assembly and manufacturing will help boost Kenya’s manufacturing capacity, create jobs and save foreign exchange.
Consequently, locally manufactured products, including sanitary towels, diapers, phones, computers, tyres and motor cycles, will not attract the Eco Levy.
The threshold for VAT registration has been increased from KSh5 million to KSh8 million. This therefore means that many small businesses will no longer need to register for VAT.
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Responsibility for electronic invoicing ETIMS, recently introduced by KRA, has been receded from farmers and small businesses with a turnover of below KSh1 million
Excise duty imposed on imported table eggs, onions and potatoes to protect local farmers.
Excise duty on alcoholic beverages will now be taxed on the basis of alcohol content and not volume. The higher the alcohol content the more excise duty it will attract. Consequently, alcohol manufacturers are expected to make safer and cheaper alcohol.
Pension contributions have been exempted from increase from KSh20,000 a month to KSh 30,000.
The Members of Parliament were also informed that adequate funds totalling to KSh18 billion have been provided for the employment of all 46,000 Junior Secondary teachers who are on internship with another portion allocated to hire 20,000 interns next month.
At the same time, President William Ruto downplayed the proposals made in the last year’s Financial Bill 2023 saying that they have led to tremendous progress in boosting the economy of the country.
He assured that the government will continue making the right decisions no matter how difficult they are for the good of the citizens.
By Vostine Ratemo
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