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The government plans to restore some of the tax measures it scrapped from the controversial Finance Bill 2024, which was repealed following public uproar, through three bills.
More details below:
The government plans to restore some tax measures from the Finance Bill 2024, aiming to address the fiscal deficit.
The proposals are classified into 3 bills:
—Tax Laws (Amendment) Bill
—Tax Procedures (Amendment) Bill
—Public Finance Management (Amendment) Bill.
Tax on Infrastructure Bonds
—A new 5% tax will apply to interest earned from infrastructure bonds for resident investors, removing previous exemptions
Increase in Railway Development Levy
—The National Treasury proposes raising the Railway Development Levy rate from 1.5% to 2.5%, aimed at boosting funds for railway infrastructure projects.
Minimum Top-Up Tax
—Multinational companies with an annual turnover over Ksh.100 billion will be subject to a 15% minimum tax to ensure they pay fair contributions.
Digital Marketplace Tax Expansion
—The Tax Laws (Amendment) Bill 2024 expands the tax on digital platforms, now covering ride-hailing, food delivery, freelance, and rental services, to broaden the tax base.
Withholding Tax on Public Goods Supply
—The bill introduces a 0.5% withholding tax on goods supplied to public entities by resident sellers and a 5% rate for non-resident sellers. (e.g., Sh100,000 sale = Sh500 tax for residents, Sh5,000 for non-residents.)
Significant Economic Presence Tax
—Replacing the previous 1.5% Digital Service Tax, the new tax rate is 6%, targeting non-residents earning income from the digital marketplace, aligning with international norms.
Pension Contributions
Annual pension contribution limits will rise from Sh240,000 to Sh360,000, or Sh30,000 monthly for employees and employers combined
KRA PIN Requirement & Tax Deductions
Kenyans working remotely must register with the KRA. Contributions to the Housing Levy and Social Health Insurance Fund (SHIF) will now be tax-deductible, reducing taxable income.
