What You Need To Know About The Finance Bill 2024
WHEREAS Article 118(1)[b] of the Constitution requires Parliament to facilitate public participation and involvement in the legislative and other business of Parliament and its Committees and Standing Order 127[3] of the National Assembly Standing Orders requires House Committees considering Bills to facilitate public participation;
AND WHEREAS, the Finance Bill,2024[National Assembly Bills No.30 of 2024] was Read for the First Time on 13th May 2024, and after that committed to the Departmental Committee on Finance and National Planning for consideration and reporting to the House;
IT IS NOTIFIED that the Finance Bill 2024 is a Bill sponsored by the Hon.Kuria Kimani, MP, which contains proposals relating to revenue-raising measures, including liability to and collection of taxes. The Bill also amends other pieces of legislation relating to fees, levies and management of public funds. In particular-
{1} The Bill seeks to amend the Income Tax Act [Cap.470] to, among others,-
[a] alter various definitions and insert new definitions;
[b] provide that foreign exchange losses realized by persons subject to interest restrictions will be deductible within three years from the date the loss is realized instead of the current five years;
[c] streamline the provisions on allowances received by an employee in respect of a period spent outside their usual place of work while on official duties;
[d ] deem payments made or facilitated by owners or operators of a digital marketplace or platform as income accrued in or derived from Kenya;
[e] repeal Digital Service Tax and introduce Significant Economic Presence Tax payable by a non-resident person whose income from the provision of services is derived from or accrues in Kenya;
[f] introduce Minimum Top-up Tax payable by a covered person where the combined effective tax rate in respect of that person for a year of income is less than four per cent;
[g] introduce Motor Vehicle Tax payable at two point fibre content of the value of a motor vehicle;
[h] include various contributions as deductible expenses in the computation of gains or profits chargeable to tax; [I] repeal affordable housing relief and post-retirement medical fund relief;
[j] allow the Commissioner to enter into an advance pricing agreement with relation to specified transactions; [k] review the deductions in respect of contributions to registered pension or provident funds and registered individual retirement funds;
[lprovidesde for the deduction of tax for the supply of goods to a public entity and making or facilitating payment on a digital marketplace; 〔m〕repeal the penalty for underpayment of instalment tax;
[n] exempt the income of an amateur sporting association and the income of any registered trust scheme, among others, from taxation;
[o] clarify payment of pension benefits from a registered pension fund, registered provident fund, registered individual retirement fund or the National Social Security Fund;
[p] remove the corporate tax rate for a company that constructs at least four hundred residential units annually;
[q] set non-resident tax rates in respect of a payment made by a public entity for the supply of goods to the public entity at five per cent;
[r] set non-resident tax rates in respect of income deemed to have accrued in or been derived from a digital marketplace at twenty per cent;
[s] set resident withholding tax rates in respect of interest arising from specified securities with a maturity of at least three years that are used to raise funds for infrastructure and other social services at five per cent;
[t] set resident withholding tax rates in respect of a payment made by a public entity for the supply of goods to the public entity at three per cent;
[u] set resident withholding tax rates in respect of income deemed to have accrued in or been derived from a digital marketplace at five per cent; and
[v] prescribe conditions for an entity to qualify for reduced capital gain tax at five per cent.
{2} The Bill seeks to amend the Value Added Tax Act [Cap.476] to, among others,-
[a] provide that the time of supply for exported goods shall be the time when the registered person the required export confirmation documents;
[b] increase the value of taxable supplies from five million shillings to eight million shillings;
[c] change the supply or importation of various goods, including gluten bread and unleavened bread, from exempt supplies to standard rate Value Added Tax[VAT];
[d] Change the supply or importation of services from exempt supplies to standard rate VAT:
[e] include the transfer of a business as a going concern as an exempt supply; and
[f] remove various items listed as zero-rated su applies, including the supply of ordinary bread, inputs and raw materials supplied to manufacturers of agricultural pest control products, agricultural pest control products, transportation of sugarcane from farms to milling factories, the supply of locally assembled and manufactured mobile phones, the supply of motorcycles, the supply of electric bicycles, the supply of solar and lithium-ion batteries, the supply of electric buses, and bioethanol vapour [BEVJ.]
{3} The Bill seeks to amend the Excise Duty Act [Cap.472] to, among others,-
[a] impose excise duty on excisable services offered in Kenya by a non-resident through a digital platform:
[b] grant remission of excise duty for spirits made from agricultural products (excluding barley), grown in Kenya:
[c] repeal the relief for raw materials used in the manufacture of excisable goods and relief for internet data services:
[d] increase the period of payment of excise duty by a licensed manufacturer of alcoholic beverages from twenty-four hours to five working days;
[e] increase the rate of excise duty for imported sugar confectionary;
[f] decrease the rate of excise duty for wines and other alcoholic beverages obtained by fermentation of fruits;
[g] decrease the rate of excise for beerier and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of specified strength;
[h] prescribe an excise duty rate for coal and vegetable oils;
[i] increase the rate of excise duty for telephone and internet data services;
[j] increase the rate of excise duty for fees charged for money transfer services by banks, money transfer agencies and other financial service providers;
[k] increase the rate of excise duty for money transfer services by cellular phone service providers; and
[l] increase the excise duty rate on betting, gaming, prize competitions and lotteries.
{4} The Bill seeks to amend the Miscellaneous Fees and Levies Act [Cap.469C] to, among others,-
[a] increase the Import Declaration Fee from 2.5% to 3%;
[b] introduce an Eco Levy on specified goods manufactured in or imported into Kenya; and
[c] exempt raw materials and machinery used to manufacture mosquito repellent from railway development levy inputs and import declaration fee inputs.
{5} The Bill seeks to amend the Tax Procedures Act [Cap.4 69B] to,among others,-
[a] prescribe the information to be contained in an electronic tax invoice; [b] requires the Commissioner to refrain from assessing or recovering an unpaid tax if it is impossible to recover an unpaid tax or there is difficulty or expense;
[c] prescribe a timeline within which a taxpayer should apply for an offset or refund of overpaid tax; and
[d] require integration of the electronic tax system with the data management and reporting system for purposes of submission of electronic documents.
{6} The Bill seeks to amend the Affordable Housing Act [No.4 of 2024] to repeal the restriction on ownership and transfer of an affordable house.
{7} The Bill seeks to amend the Industrial Training Act [Cap.237] to extend the provisions of the Tax Procedures Act to the Act about the collection of the training levy.
{8} The Bill seeks to amend the Data Protection Act [Cap.411C] to exempt the processing of personal data relating to the assessment and, enforcement collection of any tax or duty from the provisions of the Act.
{9} The Bill seeks to amend the Public Finance Management Act [Cap.412] to, among other rs, provide for the implementation of accrual accounting in Government.
{10} The Bill seeks to amend the Kenya Revenue Authority Act [Cap.469] to remove the mandate of collechargesd fees payable under the Civil Aviation Act from the Kenya Revenue Authority following the transfer of the mandate to the Kenya Civil Aviation Authority.
NOW THEREFORE, in compliance with Article 118[1][b]of the Constitution and Standing Order 127(3),the Clerk of the National Assembly hereby invites the public and stakeholders to submit memoranda on the Bills to the Departmental Committee on Finance and National Planning.
A copy of the Bill is available at the National Assembly Table Office or http://www.parliament.go.ke/the-national-assembly/house-business/bills.
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What You Need To Know About The Finance Bill 2024