How 2024 Finance Bill Impacts Key Industries in Kenya

President William Ruto assenting to the Finance Bill 2023

If the President’s proposed changes to the country’s Value Added Tax (VAT) system pass in parliament, Kenyans will bear the burden in the cost of various commodities and crucial services. The government aims to boost revenue collection to over 20% of the GDP in the next fiscal year. They are targeting about KShs 2.95T up from KShs 2.6T set for the current financial year with the Kenya Finance Bill 2024.

Kenya Finance Bill 2024 Details

Top on the list is a mandatory tax for all motor vehicle owners in the country as the government funds the 2024-2025 budget. Vehicle owners will start paying an annual tax of up to Ksh100,000 depending on the value of their cars if the new tax proposals pass.

That represents a proposed 2.5% annual tax with the minimum deduction set at Kshs 5, 000 per car. This is set to increase motoring costs amidst the costly fuel and spare parts that motorists are already grappling with.

Betting lovers have not been spared by the Kenya Finance Bill 2024 either. Gamblers are to part with Kshs 20 for every Kshs 100 staked. Treasury proposes to increase excise tax on betting stakes to 20% from the current 12.5%.

A common household food, bread, has also been targeted in the tax reforms. Treasury has proposed an added VAT on bread, of 16% after removing bread from tax exemption. Kenyans may experience a sharp rise in the cost of bread, from the current Kshs 65 to Kshs 75, a difference of Kshs 10.

In addition, mobile money transfer services like M-Pesa and money transfer charges in banks, SACCOS to rise from 15 to 20%. The Cost of financial services such as issuance of credit and debit cards, forex transactions, and processing of cheques to attract 16% VAT. This means telecoms will likely raise transfer and withdrawal charges to cover the additional burden cast on them.

Digital Content Tax

Treasury is also seeking out those operating digital platforms or monetizing digital content. Digital content creators will have to submit 20% (non-residents) and 5% for residents, of their earnings in tax.

Economic Presence Tax

This will be a 20% gross turnover tax payable by a non-resident whose income is derived from a business carried out on a digital marketplace. It is to be submitted before the 20th day of the month.

According to the bill, a digital marketplace is an online platform that enables a person to sell or provide goods, property, or services. Online services have been updated to include ride-hailing services, food delivery, freelance services, professional services, rental services (BnBs), and task-based services. 

Court proceedings against the proposed 2023 Finance Bill at the Milimani Law Courts

These and other taxes were published today in the National Finance Bill 2024. It has also listed transactions where Kenyans are required to produce their KRA PIN:

  • Registration of titles and stamping of instruments.
  • Approval of development plans and payment of water deposits.
  • Registration, transfer, and licensing of motor vehicles.
  • Registration of business names & companies.
  • Underwriting of insurance policies.
  • Trade licensing
  • Importation of goods and customs clearing and forwarding.
  • Payment of deposits for power connections.
  • All contracts for the supply of goods and services to Government ministries and public bodies.
  • Opening accounts with financial institutions and investment banks.
  • Registration and renewal of membership by professional bodies and other licensing agencies.
  • Registration of mobile cellular pay bills and till numbers by telcos.
  • Carrying out business over the Internet or an electronic network (digital marketplace)
  • Registration of a trust.
  • Registration of an employee working remotely outside Kenya for an employer in Kenya.