• The National Treasury noted that reintroducing rejected taxes would raise more revenues, enabling the country to cut borrowing
• Treasury will combine reforms into three new bills: Tax Laws (Amendment) Bill, 2024, the Tax Procedures (Amendment) Bill, 2024, and Public Finance Management (Amendment) Bill, 2024
• Tax Laws (Amendment) Bill 2024 will amend Section 3 of the Income Tax Act to include additional digital operators in the tax bracket

TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting and offers profound insights into Kenyan and global economic trends.

National Treasury officials have defended the government’s decision to re-introduce sections of the Finance Bill, 2024.

Why Treasury wants to re-introduce taxes

The exchequer noted that reintroducing rejected taxes would raise more revenues, enabling the country to cut borrowing.

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The Treasury’s director general of budget, fiscal, and economic affairs, Albert Mwenda, told Citizen TV that the government hopes to raise KSh 170 billion through these reinstated measures.

Mwenda pointed out that although the amount, equivalent to 0.9% to 1% of GDP in revenue, won’t entirely make up for the funds lost when the bill was withdrawn, it will help lower the budget deficit.

“Remember what was lost was estimated at 1.9 to 2% of GDP, so we are not going to recoup everything that we lost in the Finance Bill. The intention of this is also to ensure we don’t lose on the good proposals that Kenyans had proposed to Treasury,” Mwenda said.

Which bills have been proposed?

The National Treasury will combine the tax reforms into three new bills.

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These are the Tax Laws (Amendment) Bill, 2024, the Tax Procedures (Amendment) Bill, 2024, and the Public Finance Management (Amendment) Bill, 2024, which will be presented to Members of Parliament (MPs) for debate.

Treasury posted an explainer in local dailies detailing the new tax proposals that will burden taxpayers.

“These proposed amendments, shaped by extensive consultations with diverse stakeholders, are intended to provide a conducive environment for sustainable growth,” Treasury explained.

Which taxes will be re-introduced?

The Tax Laws (Amendment) Bill 2024 will amend Section 3 of the Income Tax Act to include additional digital operators in the tax bracket.

The introduction of the minimum top-up tax is another measure of the Tax Laws (Amendment) Bill, 2024. It proposes that foreign corporations doing business in Kenya pay a minimum tax rate of 15%.

The government also seeks to impose a withholding tax of 0.5% on residents and 5% on non-residents on products delivered to public entities, such as government offices.

Source: TUKO.co.ke