Amended Finance Bill: What the MPs will vote on

On Tuesday evening, the Chairman of the National Assembly’s Finance and Planning Committee, Kimani Correa, presented the team’s report after public engagements on the 2023 Finance Bill.

The report records changes in proposed tax measures that the government has outlined in an effort to raise revenue to fund its spending plan.

Below is a summary of the major changes currently under consideration in the National Assembly.

the bet

Changes in the treatment of winnings will see the amount gamblers bet set aside in calculating withholding tax. The initial proposal would have included wagered amounts as part of the winnings.

At the same time, the betting excise tax, the tax levied on wagered amounts, was reduced to 12.5 percent, down from 20 percent. The tax will increase from a low base of 7.5 percent at present.

is reading: KRA for milk over mad bet

to push

A new pay-as-you-earn tax band was introduced, covering earners between Sh500,000 and Sh800,000 per month at 32.5 percent.

Employees with a gross salary of more than 800,000 financial shillings will see a 35 percent higher pay rate. The previous offer had all workers above Sh500,000 a month subject to a rate of pay of 35 percent. Currently, they pay 30 percent.

liquefied petroleum gas

Liquefied petroleum gas (LPG) moves from the proposed exemption category to the zero-rated group. The change would allow LPG manufacturers to seek compensation from the Kenya Revenue Authority (KRA) for input tax, allowing for cheaper gas costs for users. Initially, the supply of LPG will be exempt, which means that this claim will not be allowed. Currently, LPG attracts VAT at the rate of eight percent.

is reading: What will the prices of the pumps look like after the VAT of 16 per roto

Cosmetics/beauty

The proposal to impose an excise tax on cosmetics, including wigs, false beards, eyelashes, artificial nails, and human hair, was rescinded. The tax was proposed at five percent.

is reading: Beauty Burden: Wigs, false beards, and eyebrows hit at 5% tax

housing tax

Amendments to contributions to the controversial New Housing Fund would see the proposed contribution reduced to 1.5 per cent from three per cent, but the contribution will now convert to levy or levy, effectively meaning the money will not be returned after it has been collected.

is reading: There are no housing tax refunds in this revised roto tax plan

Digital Content Creators

A tax deduction for income from digital content creation is proposed at five percent instead of the previous consideration of 15 percent.

is reading: Digital Service Tax: Creators break a 15-block deep cut plan

indirect tax

In the amendments to the gross sales tax, businesses with annual turnover between Sh1 million and Sh25 million will be subject to the tax from the previous proposal for establishments with turnover between Sh500,000 and Sh15 million.

However, the sales tax rate has been kept at a higher rate of three percent from one percent.

is reading: Why it will be difficult for employers from July 1

farm inputs

The supply of agricultural inputs, including pest control products and fertilizers, will continue to be subject to VAT after the removal of a proposal to exempt products, which could lead to higher input costs.

is reading: Treasury shakes up prices for farmers in Finance Bill 2023

Corn flour and sugar

Likewise, the supply of cornmeal and sugar would still be subject to the zero percent tax from the proposed exemption for key food commodities, which would have set the cost of products higher than current rates.

withheld taxes

Members of Parliament retained the proposal to impose value-added tax on petroleum products at 16 percent despite intense lobbying against the move during the public participation phase of the bill.

Other taxes withheld against public protest are a 3% digital asset tax, a 15% tax on repatriated earnings, and an export promotion tax.

is reading: World Bank: Tax plans harm purchasing power

→ (email protected)