Finance Bill 2024: Breakdown of 5 Taxes Govt is Seeking to Introduce in July

The National Treasury is set to introduce a raft of new taxes as President William Ruto’s administration seeks to raise additional revenue to finance its projects and operations heading into the next financial year.

From motor vehicle tax to digital content tax, the government will widen the tax bracket culminating in more pain for taxpayers.

The measures, published in the Finance Bill 2024, will be tabled in Parliament for the legislators to discuss the amendments which are likely to face opposition from Azimio lawmakers. takes a look at five taxes and how they will affect the taxpayer:

Treasury CS Njuguna Ndung’u speaking at the Investors conference during the 2023 Annual WB/IMF meetings, in Morocco on October 16, 2023


National Treasury

Motor Vehicle Tax

Motorists were targeted in the new wave of tax reforms after the Treasury proposed the motor vehicle tax. This is the amount a motorist pays at the time of acquiring insurance cover.

Car owners could be taxed as low as Ksh5,000 for the service and a maximum of Ksh100,000 depending on the car’s value.

The tax rate was set at 2.5 per cent of the vehicle’s value which will be determined by the engine capacity, model and year of manufacture.

Ambulances, vehicles driven by government officials and diplomatic personnel will be exempted from these charges.

Minimum Top-up Tax

This tax bracket is reserved for multinational firms with a gross (consolidated) turnover of Ksh106 billion.

The amount will be calculated at 15 per cent of net income minus the actual tax rate, multiplied by excess profit.

Several public entities will, however, be exempted from paying the taxes.

Economic Presence Tax

This will be a tax payable by a non-resident whose income is derived from a business carried out on a digital marketplace.

According to the bill, a digital marketplace means an online platform that enables a person to sell or provide goods, property or services including ride-hailing services, food delivery services, freelance services, professional services, rental services and task-based services among others.

Those supposed to pay the tax shall be required to pay 20 per cent of the gross turnover. The business owners shall submit the returns before the twentieth day of the month.

Withholding Tax

The bill seeks to introduce withholding tax on goods supplied to public entities at a three per cent rate for residents and five per cent for non-residents.

Withholding tax is income tax paid to the government by the payer of the income rather than by the recipient of the income. It is deducted at source.

The tax provision will also include those making online payments.

Digital content Tax

This will involve digital content creators submitting a percentage of their earnings in tax. Treasury is seeking a 20 per cent tax for those operating digital platforms or monetising digital content for non-residents and five per cent for residents.

The bracket for online services was expanded to include ride-hailing services, food delivery services, freelance services, professional services, rental services and task-based services. 

KRA offices in Nairobi.


Kenya Insights

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