Tag: Finance Bill 2024

I Didn’t Fire Even A Teargas Cannister, Accused Cop Denies Involvement In Killing Rex Masai

On Wednesday, a police officer denied allegations of being involved in the shooting death of Rex Masai during the protests against the Finance Bill 2024 on June 18.

Officer Isaiah Murangiri, speaking at the Milimani Court, insisted he was off duty when Masai was killed.

“I was not on duty on June 18 and 19. I only returned to work on June 20 and was assigned to KICC to manage the ongoing protests,” he stated.

Attached to Central Police Station, Murangiri explained that protests had engulfed Nairobi’s CBD from 10 am that day. He carried a teargas launcher but maintained he did not deploy it.

“I did not fire any shots or launch any teargas canisters,” he testified.

After his shift, around 6pm, he returned the launcher to the station and went home.

When confronted with accusations of shooting Rex, Murangiri replied, “I don’t know because I wasn’t armed. I wasn’t even in the CBD when Rex was shot.”

Murangiri was the fourth witness in the inquest held on December 11, 2024, but his testimony was paused due to the state’s intention to introduce video evidence.

Rex Masai, 29, lost his life after reportedly being hit by a live bullet during the evening of the protests, which had erupted across the nation.

December 12, 2024
Police Detain Protesters In March To Honour Fallen Comrades

Kenyan police detained several people on Thursday who attempted to present a petition to the president’s office and lay flowers to honour those killed a month ago on the most violent day of anti-government protests.

Among those detained were Boniface Mwangi, a prominent activist involved in the protests.

Videos posted on social media by activists showed the marchers just before they were detained, carrying white crosses stained with red and chanting: “We are peaceful!”

They had been trying to present a petition to demand justice for those who were killed in the protests.

More than 50 people have been killed since mid-June, when protesters began taking to the streets to oppose tax increases proposed by President William Ruto, according to the government-funded Kenya National Commission on Human Rights (KNCHR).

KNCHR has also said that nearly 700 people have been arbitrarily detained and 59 have been abducted or are missing in connection with the protests.

“We will not allow that their death be in vain,” Wanjira Wanjiru, an activist from the capital’s Mathare neighbourhood, said before leaving for central Nairobi to join the march.

“We will not allow our country to ever go back to the realities that you cannot go out to protest for fear that a bullet may take your life.”

Ruto withdrew the tax legislation the day after the violence at parliament and sacked most of his cabinet, but demonstrations against his government and systemic corruption have continued.

Many protesters are calling for Ruto to resign, and are angered by his nominations to a new cabinet. Most are holdovers from the previous government and some are members of the main opposition party, which the protesters have also condemned as corrupt.

Ruto says the new cabinet reflects national unity and will address the demands of the protest movement. He has promised to investigate alleged abuses by the police during demonstrations but has broadly defended their conduct.

On Thursday, he nominated Douglas Kanja to lead the national police service. Kanja had been acting in that role since July 12 when his predecessor resigned following condemnation of officers’ response to the protests.

Kanja is a career police officer with nearly four decades of experience and served as the deputy inspector general of the force.

Since the protests began in Kenya, small anti-corruption demonstrations have taken place in neighbouring Uganda and activists in Nigeria have called for protests next month against graft and the high cost of living.

July 25, 2024
Finance Bill 2024 Will Hurt Already Overburdened Kenyans, Raila Calls On MPs To Reject Outrageous Proposals

Azimio la Umoja One Kenya Alliance leader Raila Odinga has expressed his vehement opposition to Finance Bill 2024. The Opposition chief termed the Bill a regressive taxation proposal that goes ruthlessly after the poor.

Should it be ratified, Raila warns that low-income citizens will be hit with taxes on multiple fronts and will end up paying more than people with higher incomes. He insists that taxes on basic necessities such as food, cooking oil, and money transfers will disproportionately hurt the poorest of the poor.

“The Finance Bill 2024 fails the taxation dictums of predictability, simplicity, transparency, equity, administrative ease and fairness. It is worse than the one of 2023, an investment killer and a huge millstone around the necks of millions of poor Kenyans who must have hoped that the tears they shed over taxes last year would see the government lessen the tax burden in 2024,” added Raila

In Raila’s view, the country’s economy might suffer major breakdown given the proposals contained in the Bill.

“The tax proposals for 2024 will make an already bad situation worse. They could usher the collapse of an economy that is already severely suffocated, and the poor will be the hardest hit,” he warned

In a statement to newsrooms Friday evening, the Former Prime Minister further described most of the tax proposals in the Finance Bill 2024 as insensitive as they are callous.

“We see no positive result that the country which is a net importer of nearly everything can derive from the proposal to raise Import Declaration Fees from 2 percent to 3 percent. The impact is that the cost of goods will go up,” he charged

Raila argued that the tax measures put in place last year (Finance Act 2023) have subjected Kenyans to a great deal of trauma but bore no fruit. He says the intended purpose of the 2023 tax measures was to help the government raise more revenue but, instead, the Kenya Revenue Authority has consistently failed to meet targets.

“The high taxes on petroleum products occasioned a fall on the fuel levy raised. They led to closure and relocation of businesses,” he said

Odinga insists that if the government expects businesses to invest in Kenya, then it cannot afford a tax policy that “keeps swinging like a pendulum.” He says Kenya cannot afford taxation measures whose result is to inflict more pain on the poor who expect relief.

“Parliament must inject very radical surgery on the outrageous proposals in the Finance Bill 2024. We will not accept the mistakes and pains inflicted on Kenyans by the Finance Act 2023 to be continued into 2025 through Finance Bill 2024,” he said

June 8, 2024
Kenya’s Finance Bill 2024: A Burden for Businesses and Citizens?
The Kenyan government’s Finance Bill 2024, aimed at raising revenue for the 2024–2025 budget, has sparked debate.

While its goal of funding government programs is understandable, critics argue the Bill places undue pressure on businesses and ordinary Kenyans.

Let’s explore some of the Bill’s most contentious proposals.

Finance Bill 2024: Taxing Family Trusts & Eroding Investment

The Bill proposes taxing income generated by family trusts. This move discourages long-term investment and wealth creation.

Family trusts are often used for estate planning and responsible financial management.

Taxing them reduces the incentive for saving and investing within families, potentially hindering future economic growth.

Excise Duty Hike on Financial Services: Squeezing the Middle Class

The Bill increases excise duty on financial services from 15% to 20%. This directly impacts the cost of bank transfers, mobile money transactions, and other essential financial activities.

The middle class, which relies heavily on these services, will bear the brunt of this increase. Additionally, it discourages financial inclusion, making it harder for unbanked Kenyans to access financial tools.

Motor Vehicle Tax Hike: Hurting Commuters and Businesses

The Bill proposes a rise in motor vehicle taxes. This disproportionately affects Kenyans who rely on public transportation.

With higher taxes, transportation companies may raise fares, impacting daily commutes.

Businesses dependent on logistics and deliveries will also face increased costs, potentially leading to price hikes for consumers.

Digital Marketplace Tax: Targeting the Informal Sector

The Bill introduces a tax on online marketplaces. This aims to capture revenue from the growing e-commerce sector.

However, it unfairly burdens informal traders who use these platforms to reach customers. Many small businesses operate online with limited resources.

This tax could stifle their growth and push some out of the digital space altogether.

Lack of Transparency and Public Consultation

Critics argue the Bill’s development lacked transparency and public consultation. Many stakeholders, including businesses and citizens, feel their concerns were not adequately addressed.

A more inclusive approach would have allowed for a more balanced and effective financial plan.

Alternative Solutions Are Needed

The government needs alternative solutions to raise revenue. Here are some possibilities:
- Reviewing tax exemptions for large corporations: Tax breaks for big businesses could be re-evaluated to ensure a fairer distribution of the tax burden.
- Combating tax evasion and corruption: Efforts to crack down on tax evasion and corruption could generate significant revenue without placing additional strain on ordinary Kenyans.
- Investing in efficiency: Streamlining government operations and reducing wasteful spending could free up resources.
Conclusion: A Balanced Approach is Key

Kenya needs a sustainable financial plan. However, the Finance Bill 2024, in its current form, raises concerns.

The bill’s proposed taxes could stifle economic growth, disproportionately impact the middle class and informal sector, and erode trust in the government’s economic policies.

A more balanced approach that promotes long-term investment, encourages financial inclusion, and fosters economic opportunity is necessary for Kenya’s financial well-being.

Public discourse and collaboration between the government, businesses, and citizens are crucial to achieve this goal.
June 3, 2024
I Love Ruto, Finance Bill Is Meant To Help Kenyans, Passaris Vows To Support

Nairobi Woman Representative Esther Passaris has sworn to support president Ruto’s economic policies in the face of Finance Bill 2024.

Passaris who couldn’t hide her admiration for the head of state

saying he loves how he runs the government.

According to Passaris, one of Ruto’s agenda, the Finance Bill 2024 is meant to help Kenyans and she will throw her weight behind the President to ensure it succeeds.

According to her, being in Azimio does not necessarily mean she hates the President.

“Just because I’m in Azimio and I’m a Baba Girl, I also admire Ruto, I admire the President, so get with it. I don’t give a crap what you think. Just because I’m in Baba’s party, doesn’t mean I have to hate Ruto. It is not in my being. I love the President, I love the way he does things. I love his dedication to serving this country,” she confessed.

Passaris added her admiration for the President grew after he came out to help a schoolgirl who did not want to go to school but the president looked to convince her to go to school.

According to Passaris, the President touched her life in a special way that she will never forget.

“You can’t hate from Monday to Friday for the whole year,” she said.

Political future

Additionally, in the 9-minute-long video, Passaris addressed those threatening her political future in the 2027 elections, dismissing their warnings with a reminder of the uncertainties of the future.

“Don’t threaten me with 2027, first of all, you don’t even know if you’re going to be alive to vote, so just pray that you vote because if the only agenda you have for 2027 is to vote me out, just remember there’s going to be many people who want to vote me in, that’s if I’m alive and if that’s God’s plan for me. So quit with the threats all the time.”

“I will vote for it”

Passaris called out critics of the Finance Bill 2024 saying that the President needs funds to run the country.

She, however, said that there are some things she disagrees with in the Finance Bill 2024.

“Those of you who keep calling me ‘Msaliti’ because I voted for the Finance Bill 2023, well, there is going to be another one coming and even though there are some issues I may disagree with, I’m gonna vote for the Finance Bill 2024,” she said.

“We are going to try and make sure that the finance bill is going to be less harsh on the people but remember, we are a country that is in a bad space.”

Passaris Criticized

Kileleshwa MCA Robert Alai, however, took issue with Passaris’ stance and criticized her remarks.

He critiqued officials forming relationships with power holders, stressing that political leadership must prioritize citizen service, not personal connections, implying that Passaris’ approach could compromise the integrity of governance.

“With all due respect to my Woman Rep. When you elect leaders to make love to those with greater powers, you know you really messed big time,” noted Alai.

Furthermore, the Kileleshwa MCA emphasized the importance of citizen focused leadership, stating, “Political leadership is not a PIMP empire or brothel when you have to make love to each other. It’s about citizens and service notlove.”

May 17, 2024
Inside President William Ruto’s Finance Bill 2024

The following are changes in respect to the Finance Bill 2024:

1. Banking services will no longer be VAT exempt such as:

• Making of any advances or the granting of credit.
• Cheque handling, processing, clearing & settlement.
• Issuance of credit & debit cards
• Telegraphic money transfer
• Foreign exchange transactions

2. Allowable pension deduction being increased from Kes 20,000 to Kes 30,000 per month.

3. The Tax Procedures Act is being aligned with the Interpretation and General Provisions Act
around the due date for settlement of tax obligations. Going forward computation of the period will exclude Saturdays, Sundays, or public holidays.

4. Amendment of the Data Protection Act to exempt KRA from constraints in access to personal data where access to that data is deemed to be necessary for the assessment, enforcement or collection of any tax or duty under a written tax law.

5. The supply of ordinary bread will cease being VAT zero rated implying suppliers will no longer be able to claim the input element & pass the cost to the end consumers.

6. The Bill proposes to introduce an Eco Levy

• Office machines at Kes 98/unit
• Calculating machines at Kes 225/unit
• Automatic data processing machines at Kes 225/unit
• Arts & accessories at Kes 98/unit
• Telephones (including smart phones) at Kes 225/unit.
• Microphones & speakers at Kes 98/unit
• Monitors & projectors at Kes 1,275/unit
• There’s a class of diapers that will also be subject to the levy at Kes 98/unit.

7. Treasury is proposing the repeal Sec30A of the Income Tax Act – Sec30A of the Income Tax Act provides for Affordable Housing Relief (15.0% capped at Kes 9,000.0 per month or Kes 108,000.0 per annum).

8. Amending the Income Tax Act to provide for Advance Pricing Agreements (APAs).

• If you are in the transfer pricing space, there is hope for greater certainty with respect to tax outcome of international transactions.
• On the side of KRA, this should really help scale down the cost of administration on transfer pricing affairs.
• The APA shall be valid for a period that does not exceed five consecutive years. 9. Motor Vehicle Tax:
• 2.5% the value of the vehicle with the floor being set at Kes 5,000 & the ceiling is set at Kes 100,000.
• One thing to note about this tax is the penalty – 50.0% of the uncollected tax + the actual amount of uncollected tax.

10. Proposal around filing for tax refunds:

• current case – the law only refunds VAT settlement within 6 months & every other tax within 5 years, Finance Bill 2024 proposes to have only income tax refunds within 5 years & every other tax within 6 months.

11. The National Treasury has proposed to increase the rate of Import Declaration from the current 2.5% of the customs value to 3.0%.

12. Alcoholic beverage manufacturers – window for remitting excise duty collections is to be revised from the current 24hrs to 5 working days.

13. Medium-term Revenue Strategy, the threshold for VAT in Kenya will be bumped up from Kes 5.0 Millon to Kes 8.0 Millon.

14. Kenya plans to abandon the Digital Services Tax (DST) & adopt the Significant Economic Presence Tax:

• The taxable profit of a non resident person liable to pay the SEP tax shall be deemed to be 20.0% of gross turnover after which the tax is charged at 30.0%. Coming from 1.5% DST to what is a 6.0% effective rate.

15. Changes around Value Added Tax withholding agents

• Finance Bill 2024 proposes to do away with the Kes 3.0 billion investment threshold.
• Agents will now be expected to remit collections to KRA within 5 working days & not the 20th of every month.

16. eTIMS:

• · KRA will be empowered to require a taxpayer to integrate eTIMS.
• Failure to comply with this requirement will see the taxpayer charged with Kes 2.0M every month.

17. Sec14 of the Excise Duty Act is being repealed.

• It means manufacturers will no longer be able to use excise duty paid in respect of excisable imports used as raw material to offset their obligation on excise for the finished product.
• It also means those who pay excise duty having purchased data/internet in bulk for resale will no longer be able to offset excise to the final consumer with that which they paid to the service provided.
• Excise on telephone & internet data services increased from 15.0% to 20.0%.
• Excise on money transfer services by banks, money transfer agencies and other financial service providers increased 20.0%.
• Excise duty on fees charged for money transfer services by cellular phone service providers increased to 20.0%.
• Excise duty on betting back to 20.0%.

18. Finance Bill 2024 proposes to lower the restriction around sale of affordable housing units by amending the Affordable Housing Act 2024 to do away with the requirement that sales must be preceded by approval by the Affordable Housing Board.

19. Finance Bill 2024 propose taxing of interest income from new Infrastructure bonds.

20. The bill proposes to tax the income of a registered family trust which was previously
exempted.

21. The Finance Bill, 2024 proposes to delete the VAT exemption provided under first schedule to VAT Act for betting, gaming & lottery services.

22. VAT exemption on certain goods and services used in construction of tourism facilities, and construction of specialised hospitals are being removed, aiming to standardize the tax structure across different
sectors.

23. The following items have been moved from zero rating to exempt i) Motor cycles

ii) Inputs for the manufacture of agricultural pest control iii) Agricultural pest control

24. The following items are no longer zero rated

i) Supply of ordinary bread
ii) Transportation of sugarcane from farm to milling house iii) Supply of locally assembled mobile phones
iv) Supply of Electric bicycles
v) Supply of solar and lithium ion batteries
25. The following items have been removed from exempt goods:

Unleavened and gluten bread

26. The finance bill introduces withholding tax on goods supplied to public entities at 3% for resident persons and 5% for non-residents.

27. The Finance bill proposes VAT exemption on transfer of business as a going concern.

28. Contribution to Social Health Insurance Fund, post-retirement medical funds, and the
affordable housing levy will now be deductible expenses.

29. The bill proposes to increase the import declaration fees from the current rate of 2.3% of custom value to 3%.

May 16, 2024
Don’t Use Your Car If You Don’t Want To Pay Vehicle Tax, MP Kuria Tells Off Kenyans Opposing Finance Bill 2024

Molo Constituency member of parliament (MP) Kuria Kimani, who is also chair of the National Assembly Finance Committee has defended the government’s proposal to tax car owners through a motor vehicle circulation tax.

The motor vehicle tax has been included in the new Finance Bill 2024 which seeks to introduce an annual tax that will be paid during motor vehicle insurance cover acquisition.

According to the Bill, the minimum amount for the vehicle tax is Ksh.5,000, which should also translate to 2.5 percent of the vehicle’s value.

Speaking during an interview with NTV on Tuesday May 14, 2024, Kimani described the levy as a hybrid of income and wealth tax.

According to the MP, the move of taxing vehicles will encourage investment in public transport and minimize the use of private cars.

“If you don’t want to pay the motor vehicle circulation tax, then don’t use the car. If you don’t want to use the expressway, then don’t pay for it and use other means,” he said.

In addition, he advised car owners opposed to the tax to avoid using personal cars and instead use public transport.

“If you go to economies ahead of us, there are elaborate and very efficient public transport systems,” he added.

He revealed that most investors are shying away from investing in public transport in the country because majority of Kenyans prefer the comfort of personal cars.

“Every time investors want to invest in our public transport system through public-private partnerships, the feasibility studies show that we like to drive our cars so much that we are not able to attract foreign investment,” he said.

However, ambulances, and government-owned vehicles are exempt from the motor vehicle circulation tax as stipulated in the Privileges and Immunities Act.

If the bill is passed, car owners who fail to remit the tax within five working days after issuing of motor vehicle insurance cover shall be liable to a penalty of fifty percent of the uncollected tax.

May 15, 2024
Finance Bill: M-Pesa, Bank Transaction Charges To Go Up

Mobile and bank transactions in Kenya are likely to go up by at least five per cent if the Finance Bill, 2024 is signed into law in its current form.

According to the Finance Bill, 2024 measures to fund the budget for the financial year starting July 1 seen by the Star shows that the Kenya Kwanza government is proposing a total overhaul of tax relief on transactions introduced in 2022.

According to the proposed law, excise duty on bank transactions has been reverted to 20 per cent from 15 per cent while those on mobile phone transactions like M-Pesa which had been revised to 12 per cent from 15 per cent have been pushed to 20 per cent.

This means telcos are likely to raise transfer and withdrawal charges to cover the additional tax burden.

Today, transferring Sh101-500 on M-Pesa costs Sh7 while users are charged Sh29 as withdrawal charges.

A five per cent increase means that transfer and withdrawal charges will rise to at least Sh7.35 and Sh30.45 respectively.

Those intending to transfer a higher limit of Sh250,000 will now pay Sh113.40 up from the current Sh108. Those withdrawing this upper limit amount will now incur Sh324.50 up from the current Sh309.

Excise duty on bank transactions on banks which had been relaxed to 15 per cent in 2022 has been raised to 20 per cent, an aspect that might trigger costly bank charges.

Although the government aims to boost revenue collection to over 20 per cent of the GDP in the next fiscal year to about Sh2.95 trillion up from Sh2.6 trillion set for the current financial year, high charges on mobile transactions could hurt Kenya’s progress as a digital superhighway.

The government is also planning to raid farmers in a bid to bring more informal players into the tax bracket.

Farmers

According to the proposed law, President William Ruto’s regime is contemplating introducing a five per cent withholding tax on agricultural produce delivered to organized groups such as co-operatives.

The proposed withholding tax will act as an initial step in ensuring that farmers are within the tax net.

The farmers will be expected to account for tax on the income they receive from co-operatives if the proposal in the National Tax Policy and the Medium-Term Revenue Strategy FY 2023/24-2026/27 (MTRS) is implemented.

Additional steps that will be implemented to ensure the collection of additional revenue include the progressive phasing out of preferential corporate tax rates and the rationalization of tax exemptions for corporate entities and individuals.

The National Tax Policy articulates broad guidelines to guide tax administration while the MTRS outlines the specific reforms that will boost revenue collection during the strategy period.

Content creators

The government is also planning to amend Section 2 of the Income Tax Act to expand the definition of digital content monetization to include creative works, creating or sharing of materials, or any other materials that are noted exempted under the Act.

During this period, the government is planning to review the digital service tax (DST) to bring on board residents.

DST is currently payable by non-residents on income derived or accrued in Kenya from services offered through a digital marketplace.

The applicable rate is 1.5 per cent of the gross transaction value. It is not clear whether the DST will be an advance tax for the affected resident or whether it will be the final tax.

The previous government introduced DST alongside VAT on digital market supply.

Starting in January 2021, individuals earning income by offering services or products through online platforms were required to pay this tax.

Furthermore, the law specified that both Kenyan residents and non-residents with permanent establishments in the country could utilize the tax amount as a deduction against their income liability for that particular year.

Last year, Kenya doubled DST to three per cent which earned KRA Sh5.3 billion.

Other changes include the introduction of income tax on repatriated income, and digital asset tax payable by persons who derive income from the transfer or exchange of digital assets.

They include ride-hailing services, food delivery, freelance, professional and rental services.

Although the proposal aims to review upward excise duty on alcoholic beverages, cigarettes, tobacco and sugar-containing products, the bill has given relief to manufacturers of alcoholic drinks and beverages.

The tax proposal now wants them to remit excise duty within five days and not 24 hours from the time the drinks are removed from the stockroom.

This requirement has faced repeated criticism for the reason that it is counterproductive and unfair to demand tax before the manufacturer sells the product and reconciles their sales.

Experts have also argued that the Excise tax is also a consumption and not an advance tax, and for these reasons, we expect that this year, the requirement to pay the tax within 24 hours will be reviewed.

In addition to the above, the government is considering developing a framework that will guide the introduction of a carbon tax in Kenya.

Over and above promoting the generation of additional revenue, this initiative is expected to lower greenhouse gas (GHG) emissions and ensure the State meets its environmental sustainability goals.

In a bid to have free access to data, the Government, according to the MTRS, will pursue an amendment to the Data Protection Act, 2019 to exempt the processing of personal data for purposes of taxation.

Intended reduction of the VAT rate by 1 percent and adjustment of the VAT registration threshold from Sh5 million to Sh8 million.

May 13, 2024