The Finance Bill 2024 continues to generate controversy due to its potential impact on the financial well-being of Kenyans. Many have expressed concerns about the imminent burden it imposes on citizens through increased taxes.
However, amid this apprehension, the bill offers a ray of relief and hope. One laudable proposal is to revise non-taxable benefits for employees, which has not been reviewed in nearly two decades.
The amendment seeks to align the current limits with the economic landscape, providing much-needed relief to employees and giving flexibility to employers in enhancing their employment packages.
Adjusts the daily non-taxable allowance limit for employees who work outside their regular place of employment to 5 percent of their gross monthly income.
By tying this maximum to a percentage of an employee's gross monthly income, the amendment recognizes and accommodates the diverse compensation needs of individuals across different employment levels.
The increase in non-taxable benefits corresponds with the escalating cost of living, providing much-needed relief to individuals who were restricted by thresholds that failed to keep pace with inflation.
Central Bank of Kenya data reveals that the value of the Kenyan Shilling against the US Dollar has weakened significantly over the years. In 2006 (when the non-taxable daily allowance limit was last reviewed), the average exchange rate was 70 shillings to the dollar, while the current rate is 130 shillings to the dollar, almost double the 2006 rate.
In light of these economic challenges, the proposed amendments are a way to enable employers to provide more attractive employment packages, ultimately benefiting the entire workforce.
However, there are areas that require more clarity and definition. For example, explicit definitions of terms such as “gross revenue” and clear guidance on the requirements for employers to maintain payment and accounting policies for subsistence allowances will be necessary for effective implementation.
The writer is the CFO at Multichoice Kenya.
