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Mabadiliko mapya kwenye Sheria ya Fedha yanalenga kukusanya Tsh. Trilioni 4.92 kwaajili ya utekelezaji wa Mipango ya Bajeti ya kwanza ya Rais William Ruto ambayo imekadiriwa kufikia Tsh. Trilioni 61.32 kwa mwaka wa Fedha wa 2023/24.
Sheria hiyo inayoanza kutumika rasmi Julai 1, 2023, itawataka Wafanyabiashara wenye mauzo yanayozidi Tsh. Milioni 425 kwa mwaka, kulipa Kodi ya 30% kutoka 1% wanayolipa sasa.
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President William Ruto has signed into law the controversial Finance Bill 2023 amid plans by the opposition for renewed demonstrations against some revenue-raising measures, and a court petition by Busia Senator Okiya Omtatah.
The inking of the bill on Monday clears the way for the implementation of punitive taxes and levies introduced by the Kenya Kwanza administration.
They include the standard-rated 16 per cent Value Added Tax (VAT) on fuel products and housing tax, which are now set to take effect from July 1, 2023, two days before the hearing of the petition filed by Mr Omtatah.
The debut revenue-raising plan for the Ruto administration seeks to mobilise as much as Sh289 billion worth of additional tax revenue to finance the administration’s Sh3.6 trillion budget for the 2023/24 financial year.
Dr Ruto's signature follows Parliament’s passage of the bill, which raised VAT on fuel products from eight per cent to 16 per cent, and the introduced a 1.5 per cent housing tax on employees’ basic salaries — charged on both the employer and the employee. The government targets to collect Sh83 billion per annum through the introduction of the housing tax.
The two key proposals will have far-reaching implications on households across the country due to their effect in raising the cost of production and transportation of goods, even as they reduce salaries by adding deductions to the payslip.
On fuel, the president’s assent now means that effective July 1, Kenyans will part with an additional Sh10.26 per litre of petroleum products (super, diesel and kerosene).
The increase in pump prices would have been larger but the Finance Bill 2023 granted consumers some relief through the reduction of Railway Development Levy from 2.5 per cent to 1.5 per cent and Import Declaration Fee from 3.5 per cent to 2.5 per cent. The government targets to collect Sh50 billion per annum through the standard rating of VAT on petroleum products.
Additionally, starting July 1, businesses whose turnover exceeds Sh25 million per year will be graduated into the corporate tax category of 30 per cent, unlike the present case where they enjoy the turnover tax rate of 1per cent.
This follows the changes in the Finance Bill 2023, which revised the band of businesses eligible for turnover tax from the current Sh1.0 million to Sh50 million to a new band of Sh1 million to Sh25 million.
The change is designed to ensure that more businesses are netted into the high-yielding corporate tax rate.
For businesses that remain eligible for turnover tax, they will be required to comply with the new rate of three per cent effective July 1, compared to the current rate of one per cent.
Another major change, which takes effect on July 1, is the introduction of new Pay As You Earn (Paye) tax bands of 32.5 per cent for persons earning a monthly gross salary of between Sh500,000 and Sh800,000 and the new 35 per cent band for any gross pay above Sh800,000.
Persons who remit rental income tax can heave a sigh of relief, with the rate of tax revised downward from the current 10 per cent to 7.5 per cent.
Other winners are those who remit withholding tax and excise tax, other than players in the betting sector, with the duration of remitting collections to the tax man having been extended from the earlier proposed 24 hours to five working days.
NATION
