The National Assembly Finance Committee bowed to pressure from various stakeholders and dropped a number of controversial provisions in the 2024 Finance Bill, even as Kenyans took to the streets in Nairobi on Tuesday morning to protest the proposed laws.
This afternoon, the committee is expected to submit its report with its recommendations to the House of Representatives.
Kenyans protest punitive taxes in Nairobi
This comes as Kenya's ruling Kwanzaa and opposition Azimyu MPs were summoned by their leaderships to meetings on Tuesday to strengthen their positions on the bill.
The Kenya Kwanzaa Parliamentary Caucus, which was chaired by President William Ruto at State House on Tuesday, comes as his outspoken deputy, Rigate Gachagwa, was accused of inciting MPs associated with him to drop the bill over his punitive proposals.
Azimyo also urged his members to drop it, but with the committee recommending the removal of punitive taxes, it remains to be seen how MPs will handle the debate on the bill.
It was engaged in battles on Tuesday as police arrested dozens of protesters on the streets of Nairobi who oppose the 2024 Finance Bill. Earlier, police declared the demonstrations illegal.
The protests, dubbed “Occupy Parliament”, aim to pressure lawmakers not to pass the bill.
Kenyan activist Ojiro Odhiambo protests against the 2024 Finance Bill on Kimathi Street, Nairobi on June 18, 2024.
Image credit: Steve Otieno | Nation Media Group
Tax changes
In an address to the nation, the Kimani Kuria-led committee announced the proposed changes, noting that it was aware of the inflationary pressures facing many Kenyans.
Excise tax on M-Pesa transactions
Customs duties on mobile money transfers are set to remain at 15%, not 20% as proposed by the National Treasury.
The 16% value-added tax on financial services and foreign exchange transactions has been cancelled.
The environmental duty tax will only be imposed on imported finished products. Locally manufactured products, such as sanitary pads, diapers, phones, computers, wheelchair tires and motorcycles, will not be subject to the environmental tax. The move aims to protect local manufacturing and preserve jobs.
Eliminate customs duties on imported eggs
The committee proposed imposing selective fees on onions, eggs, potatoes and onions in a move aimed at protecting local producers. However, it was not clear whether this applied to onions, potatoes and eggs from East African Community countries.
The 16% value-added tax was cancelled. However, it is not clear whether it will remain within the zero-rated schedule or be moved to the exempt schedule. Moving it to the exemption table means that manufacturers will not be able to claim input tax and thus pass it on to final consumers.
2.5% vehicle tax
The committee canceled the 2.5 percent tax on cars under the pretext that it would paralyze the insurance sector. The committee also indicated that the tax should not be applied within the income tax.
Farmers with a turnover of less than Sh1 million are exempt from the requirement to generate a tax invoice through the Electronic Tax Invoice Management System (e-Tims).
Proposal to allow KRA to spy on Kenyans
The Committee dropped a proposal to amend data protection laws to exempt data processing related to the assessment, enforcement or collection of any taxes/fees.
