Major Tax Proposals Removed from Finance Bill

The Kenya Kwanza Government has withdrawn several controversial tax proposals from the Finance Bill 2024 following widespread public opposition.

The decision came after a Kenya Kwanza Parliamentary Group meeting led by President William Ruto at State House, Nairobi.

National Assembly Finance Committee Chair Kuria Kimani stated, “After robust public opposition, it became clear that some proposed taxes would significantly burden the populace. We have taken decisive action to address these concerns.”

Key proposals that have been dropped include:

• Taxes on Bread and Motor Vehicles: These levies faced strong backlash due to their potential to drive up essential living costs.
• Eco-Tax: The eco-tax, initially intended to apply broadly, has been scrapped in its original form.
• Excise Duty on Vegetable Oil: This duty has been removed to avoid increasing consumer food costs.
• Taxes on Locally Manufactured Diapers and Sanitary Pads: These products will no longer face additional taxation, benefiting families and women.

However, the existing 15% tax on mobile service transfers remains unchanged.

The Eco Levy will now only apply to imported finished goods to promote local manufacturing and reduce reliance on imports, aiming to enhance local manufacturing capacity, create jobs, and save foreign exchange.

The government has also raised the VAT registration threshold from Sh5 million to Sh8 million, providing relief to many small businesses.

Additionally, responsibility for electronic invoicing (ETIMS) has been relieved from farmers and small businesses with turnovers below Sh1 million.

To protect local farmers, excise duty has been introduced on imported table eggs, onions, and potatoes. This measure is intended to shield domestic agriculture from foreign competition.

In a bid to encourage safer and more affordable production of alcoholic beverages, the excise duty on these products will now be based on alcohol content rather than volume.

Furthermore, the monthly exemption for pension contributions has been increased from Sh20,000 to Sh30,000, offering greater financial relief to contributors.