The Finance Bill 2024 has been released, and the 135-page document has proposed a slew of measures that will shore up and widen the tax base, generating more revenue to cater to the Government’s plans in the next financial year of 2024/2025.
The latest measure, which has evoked both positive and negative reactions, is the 16 percent VAT on bread, with a 400g loaf set to rise by at least Ksh10 under the new law. The Treasury has also mooted the idea of removing ordinary bread from the list of zero-rated supplies, a VAT exemption list.
However, the biggest squeeze will be upon vehicle owners, who will have to shell out up to Ksh100,000 as the new tax under the annual tax regimen.
The amount will depend upon the value of their cars. The proposal, if approved by Parliament, is set to increase motoring costs amidst the costly fuel and spare parts.
The Bill proposes a 2.5% yearly tax on the value of the vehicles and will feature a deduction of a minimum of Ksh5,000 and a maximum of Ksh100,000. The deduction, which has been named vehicle tax, will be paid on each vehicle at the time of issuing an insurance cover.
The latest measures will also increase the prices of imported motorcycles costing Ksh130,000 and above. The Treasury is proposing to augment excise duty on a two-tier system featuring the current flat rate of Ksh12,952 or a new proposed rate of 10 percent of the unit’s value.
The proposals, if adopted, will also affect the prices of motorcycles with 100 cc or above engines and in turn push them out of the reach of many Kenyans.
The proposal is also going to affect the gambling industry, with gamblers having to shell out 20 shillings for every 100 shillings staked. The Treasury has proposed to increase excise tax on betting stakes to 20 percent from the current 12.5 percent.
The new proposals also seek to increase excise cess for SACCOS on mobile money transfer services like M-Pesa and money transfer charges in banks from 15 to 20 percent.
Additionally, services like the issuance of credit and debit cards, forex transactions, and processing of cheques will attract 16 percent VAT.
However, beer lovers will have something to cheer about as the Treasury proposes to slash excise duty on a 500ml bottle of beer with 4.2 percent alcohol content from 71 shillings and 22 cents to 47 shillings and 25 cents.
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