KPMG Kenya Finance Bill, 2024 Analysis

Finance Bill,
2024 Analysis
Kenya
May 2024
kpmg.com/eastafrica
Foreword Income Tax- Pay As You Earn Value Added Tax Tax Procedures Excise Duty Miscellaneous Fees Other Acts
Corporation Tax Act & Levies Act
Foreword
The theme of the 2024 Budget Policy Statement (BPS) is "Sustaining The current MTRS, which runs for a period of three fiscal years i.e., FY
Bottom-Up Economic Transformation Agenda for Economic Recovery and 2024/25 to FY 2026/27 aims to grow the tax to GDP ratio from 14.1% to 20%
Improved Livelihoods." The BPS, which is the second under the Kenya within this time frame.
Kwanza Administration, focuses on supporting the Bottom-Up Economic
The MTRS provides a raft of proposed tax changes that are aimed at
Transformation Agenda (BETA) and aligns with Kenya’s Vision 2030's
achieving the target set in the MTRS. Given this context, the government
Fourth Medium-Term Plan.
introduced the Finance Bill, 2024 (the Bill), which proposes significant
At a macro-economic level, Kenya’s economy has demonstrated resilience, changes to the tax framework. Some of these changes are in line with the
growing by 5.6% in the first three quarters of 2023, exceeding global and tax reforms proposed in the MTRS.
regional averages. The projected growth for 2023 and 2024 is 5.5%, driven Notable among these proposals is the introduction of a contentious motor
by private sector growth, service sectors, agriculture, and policy measures vehicle tax set at a rate of 2.5% of the value of the vehicle, with a floor of
supporting BETA. KES 5,000 and ceiling of KES 100,000.
Following the review of the 2024/25 BPS, the Budget and Appropriations
Another key change entails extending the time frame for the Kenya Revenue
Committee approved expenditure of KES 3.914 trillion. The estimated
Authority to issue decisions from 60 to 90 days.
revenues from taxes is expected to be KES 3.354 trillion, made up of
ordinary revenues of KES 2.913 trillion and appropriations-in-aid of KES Further, there is a proposal to increase the VAT registration threshold for
441 billion. taxpayers making taxable supplies from KES 5 million to KES 8 million.
Further, the projected fiscal deficit will be KES 703.9 billion which is the On the international tax front, the Bill suggests implementing a minimum top-
difference between total revenues and grants and total expenditure and net up tax of 15%, mirroring the Inclusive Framework Pillar Two proposal. This
lending. This fiscal deficit represents 3.9% of Gross Domestic Product provision applies to resident persons or entities with a permanent
(GDP). establishment in Kenya that are part of a multinational group with a
consolidated annual turnover of EUR 750 million (approximately KES 108
A key facet in mobilizing revenue was the formulation and publication of the billion) in at least two of the previous four years preceding the first year of
Medium-Term Revenue Strategy (MTRS). The primary aim of the MTRS income.
was to provide a framework for tax systems reforms aimed at boosting
domestic revenue, which had been declining over time. In the following sections, we present our detailed analysis of the proposed
changes.
© 2024. KPMG Advisory Services Limited, a Kenyan Limited Liability Company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Finance Bill, 204 Analysis 2
Income Tax-
Corporation Tax
Income Tax-CorporationTax
“Digital content monetization” definition broadened
Proposed amendment: The Bill proposes to broaden the definition of “digital content monetization” to include creative works, creating or sharing of
material and any other material that is not exempt from tax under the Income Tax Act (ITA).
Implication: The proposed definition broadens the meaning of “digital content monetization” thus broadening the tax base. This change is
primarily informed by Kenya’s rapidly growing digital content creation industry.
Proposed effective date: 1 July 2024
KRA registration requirement removed for retirement, pension and provident funds
Proposed provision: The proposed amendment seeks to remove the requirement for retirement, pension and provident funds (the funds) to be
registered with both the Commissioner for Domestic Taxes and the Retirement Benefits Authority (RBA). The proposal is to restrict registration of
these funds to the RBA.
Implication: The funds are already exempt from income tax under the Frist Schedule to the ITA. Thus, the proposal alleviates the
administrative burden associated with dual registration by eliminating the requirement to register with Kenya Revenue Authority (KRA).
Definition of “Royalty” broadened
Proposed amendment: The Bill proposes expanding the definition of 'royalty' to include a payment
made as a consideration for the use or right to use any software, proprietary or off-the-shelf, whether in
the form of license, development, training, maintenance or support fees and includes the distribution of
software.
Implication: The proposed provision seeks to include payments for the use or transfer of the right to use
software, further exacerbated by the digitalization of the economy which has led to an increase in the
number of cross-border transactions related to software products. This follows various cases ruled in
favour of the taxpayer, such as Seven Seas Technologies Limited v the Commissioner of Domestic
Taxes, on the grounds that the distribution of software is not subject to withholding tax where the
distributor does not exploit any right in the software.
This provision does not however address the different circumstances under which a software payment
would be classified as a royalty or as business profits, thus lending itself to misinterpretation. It would be
paramount for the Commissioner to issue guidance for the application of the law to different types of
transactions, such as those involving the distribution of software by intermediaries that does not involve
the transfer of rights to (reproduce) the software itself, but rather the right to distribute the software (as
provided for under Article 12 of both the OECD and UN Model Tax Convention). Such a transaction would
ordinarily be treated with as business profits, and not a royalty.
Who is a related person?
Proposed provision:
The Bill proposes to delete the current definition of a related person under Section 18(6) of the Income Tax Act and Paragraph 3 of Part I of the Eighth
Schedule, and substitute the same with an updated definition of a related person under Section 2 as follows:
”in the case of two persons, either person who participates directly or indirectly in the management, control or capital of the business of the other person,
and in the case of more than two persons,-
a. Any other person who participates directly or indirectly in the management, control or capital of the business of the two persons; or
b. An individual who-
i. participates directly or indirectly in the management, control or capital of the business of the two persons; and
ii. is associated to the two persons by marriage, consanguinity or affinity and the two persons participate in the management, control or capital of
business of the individual
Implication; Currently, the term “related person” under Section 2 of the ITA only includes situations where two people participate directly or indirectly in
each other’s business management control or capital. This proposed provision introduces one definition of a related person, which avoids having multiple
definitions as under Section 2, 18(6) and paragraph 3, part I of the Eighth Schedule of the Income Tax Act, which may lead to different interpretations.
Income Tax
Donations now defined
Proposed provision: The Bill proposes to define ‘donation” to mean a

benefit in money in any form, promissory note or a benefit in kind
conferred on a person without any consideration.
Implication: The definition provides clarity as to what constitutes a

donation for purposes of qualifying for exemption under the First
Schedule to the ITA.
A reprieve for telecommunication industry 3 years cap for deferment of foreign realized exchange
Proposed provision: The Bill proposes to extend the capital Proposed amendment: The Bill proposes to reduce the period
allowance of 10% per year, to include a spectrum licence by a for deferment of realized exchange loss from 5 to 3 years.
telecommunication operator. This investment allowance will apply
on the remaining useful life of the license where the licence is
acquired before 1 July 2024. Implication:
Companies subject to interest restriction with respect to non-

resident loans will be able to deduct foreign exchange losses
Implication: The proposal now clarifies that spectrum licences will within three years from the date of realization. Accordingly,
be eligible for investment allowance at the rate of 10%. companies will have to restructure their debt within the same
Telecommunication companies incur significant costs in purchasing three-year period to reverse their interest restriction position to
indefeasible rights to use fibre optic cable and spectrum licenses. avoid forfeiting the realized foreign exchange loss deduction.
However, only IRUs are eligible for investment allowances, meaning Proposed effective date: 1 July 2024
that telecommunication companies miss out on investment
allowances on spectrum licenses, which may result in a higher tax
payable.
With this proposal, investment in spectrum licenses will be treated

as capital expenditure and become eligible for investment
allowance from the date when this provision will come into force.
Repeal of Digital Service Tax and Replacement with Significant
Economic Presence Tax Implication:
Proposed amendment: The Bill proposes the abolition of the digital The proposed effective tax rate of 6%, will substantially increase the
service tax and its replacement with a significant economic presence (SEP) tax on from income generated through digital marketplaces, currently
tax, that will apply to non-resident person whose income from the provision subject to tax at 1.5% under the Digital Services Tax (DST) regime.
of services is derived from or accrues in Kenya through a business carried SEP offers alternative nexus rules to tax the profits rather than tax
out over a digital marketplace. the gross turnover as currently determined under Digital Services Tax
Additionally, the Bill proposes to include the following incomes as exempt (DST).
from SEP tax: Kenya is a member of the Organization for Economic Cooperation
— Payments made by a resident person or person with a permanent and Development’s (OECD) Inclusive Framework on Base Erosion
establishment with respect to management or professional fees, and Profit Shifting (BEPS), which introduced the Two Pillar Solution
royalties, interest etc. to address tax challenges arising from the digitalization of the
economy.
— business of transmitting messages by cable, radio, optical fibre,
television broadcasting, Very Small Aperture Terminal (VSAT), internet, Alternative nexus measures may fall within the scope of unilateral tax
satellite or by any other similar method of communication measures under Pillar One. A jurisdiction implementing such a
measure will be required to disapply (switch off) that measure in
The proposed chargeable tax is 30% of the taxable profit, which will be respect of Amount A companies if it joins the Multilateral Tax
20% of the gross turnover, subject to Regulations that the CS National Convention (MLC).
Treasury may issue.
Proposed effective date: 1January 2025
Moreover, the Bill proposes that both the tax and the corresponding tax
return are due on or before the 20th day of the month following the month in
which the service was offered.
Minimum Top-up Tax
The Bill proposes to introduce a minimum top-up tax (MTT) applicable to a  Net income or loss means the sum net income or loss for the year of
“covered person” meaning a resident person or person with a permanent income after deducting the sum of the losses of a covered person as
establishment in Kenya who are part of a multinational group with a determined under a recognised accounting standards in Kenya.
consolidated annual turnover of EUR 750 million. (Approximately KES 106
billion) in at least two of the previous four years of income immediately  Excess profit means the net income or loss of a covered person for
preceding the first year of income. the year of income less:
– 10% for the employee costs; and
The minimum top up tax shall be the difference between fifteen percent of the
net income or loss for the year of income for a covered person, and the – 8% for the net book value of tangible assets: Provided that the
combined effective tax rate for the year of income, multiplied by the excess employee cost and book value of tangible assets may be
profit of the covered person. adjusted as prescribed in regulations
Definitions: The provisions shall not apply to;
 The combined effective tax rate for a covered person shall be the sum of a. A public entity not engaged in business;
all adjusted covered taxes, divided by the sum of all net income or loss for b. A person whose income is exempt from tax under paragraph 10 of the
the year income, multiplied by a hundred. First Schedule;
c. A pension fund and the assets of that pension fund;
 The adjusted covered taxes are defined as taxes recorded in the financial d. A real estate investment vehicle that is an ultimate parent entity;
accounts of a constituent entity for the income, profits or share of the e. A non-operating investment holding company;
income or profits of a constituent entity where the constituent entity owns f. An investment fund that is an ultimate parent entity;
an interests, and includes taxes on distributed profits, deemed profit g. A sovereign wealth fund; or
distributions under this Act subject to such adjustments as may be h. An intergovernmental or supranational organization including a wholly
prescribed. owned agency or organ of the intergovernmental or supranational
organization.
Minimum Top Up Tax Calculation
Implication: This proposal, which provides for the introduction of a MTT on covered persons in Kenya, seems to be aligned to the Global Anti-Base Erosion
(GloBE) Model Rules under Pillar Two of the Organization for Economic Cooperation and Development (OECD) Inclusive Framework two-pillar proposal to
address the tax challenges arising from digitalization of the economy. The GloBE Rules provide for source countries to introduce a miminum tax to be
included in the domestic law of a jurisidiction, which gives taxing right to either the source or parent entity jurisdiction to ensure that multinational entities are
subject to a minimum tax rate of 15%.
We expect that Cabinet Secretary shall introduce detailed regulations to provide guidance on the application and interpretation of proposed provisions.
Kenya offers a variety of incentives through the Special Economic Zone (SEZ) and Export Processing Zone (EPZ), and capital allowances. This proposal will
roll back tax incentives for in-scope multinational entities. Kenya joins other Organization for Economic Cooperation and Development (OECD) Inclusive
Framework African countries such as South Africa that have introduced minimum top up tax legislative proposals.
Proposed effective date: 1January 2025
ADJUSTED COVERED
TAXES
(10% OF EMPLOYEE
NET INCOME/LOSS COSTS + 8% OF 15% 100% MINIMUM TOP-UP TAX
TANGIBLE ASSETS )
NET INCOME OR LOSS

FOR THE YEAR
Excess profit Combined effective tax rate (%)

Proposed effective date: 1 January 2025
Advance Pricing Agreement
Proposed provision: The Bill proposes to introduce a provision allowing non-resident persons who carry out business with related resident persons or through
a permanent establishment in Kenya, or resident persons who carry on business with related persons operating in a preferential regime, to enter into Advance
Pricing Agreements (APA). The APA shall be valid for a period not exceeding five consecutive years.
Implication:
The OECD Transfer Pricing Guidelines for Multinational Entities and Tax Administration defines an advance pricing arrangement as “An arrangement that
determines, in advance of controlled transactions, an appropriate set of criteria (e.g., method, comparables and appropriate adjustments thereto, critical
assumptions as to future events) for the determination of the transfer pricing for those transactions over a fixed period of time. An advance pricing
arrangement may be unilateral involving one tax administration and a taxpayer or multilateral involving the agreement of two or more tax administrations.”
The proposed APA legislation will allow multinational entities to reach agreements with the Commissioner regarding the pricing of related party
transactions, especially for complex transactions where traditional methods might pose challenges and have a high risk of transfer pricing disputes arising
in future.
While the proposed provision is commendable and offers tax certainty, we note that it only covers unilateral APAs (i.e. entered between the Kenya Revenue
Authority and a taxpayer). This may lead to double taxation where another jurisdiction affected by the controlled transactions covered by the APA rejects
the results of the APA concluded in Kenya.
The proposed legislation allows the Commissioner to issue a notice declaring an APA to be null and void in circumstances where the person entered an
APA through a misrepresentation of facts.
Kenya joins other countries in East Africa such as Tanzania, Uganda and Rwanda whose tax legislation provides for APAs. We expect the Commissioner to
operationalize the proposed provision through introduction of regulations.
Motor Vehicle Tax at 2.5%
Proposed amendment: The Bill proposes to introduce a motor vehicle tax Implication:
of 2.5% of the value of the motor vehicle to be collected by insurer at the The proposal seeks to widen the tax base by bringing into tax, motor
point of issuing motor vehicle insurance. vehicle owners, given the surge in motor vehicles on Kenyan roads. In our
The proposed tax amount shall be a minimum of KES 5,000 and a view, the motor vehicle tax will be applicable on the insurable amount
maximum of KES 100,000. which is largely based on the value of the motor vehicle as determined by a
third-party qualified valuer. It will be interesting to see the Commissioner’s
The value will be determined based on factors such as make, model, guidelines on the valuation of motor vehicles, especially for third-party
engine capacity (in cubic centimeters), and year of manufacture, subject insurance policy covers.
the Commissioner’s prescribed guidelines on the valuation of the motor
vehicle. However, this comes against the backdrop of revised insurance premium
rates and high fuel prices, inevitably shoring up the cost of operating motor
This tax should be remitted to KRA within five working days. The applicable vehicles in Kenya.
penalty for failure to account for motor vehicle tax due will give rise to a
penalty of 50% of the tax due. This will have a negative impact on the transport and logistics industry who
may opt to pass through the additional cost to their customers thus
However, the following vehicles have been exempted from this tax —- escalating cost of living through multiplier effect.
ambulances, vehicles owned by the national government, county
government, Kenya Defence Forces, National Police Service, National It is also important to note that the motor vehicle tax, unlike advance tax on
Intelligence Service, or those exempt from tax under the Privileges and commercial vehicles, cannot be offset against income tax payable.
Immunities Act. Proposed effective date: 1 January 2025
Income Tax-CorporationTax WHT on interest on infrastructure and social bonds

Aligning late income tax filing penalties for EPZ enterprise to the TPA
Proposed provision: The Bill proposes to remove the daily penalty of Proposed provision: The Bill proposes to introduce withholding tax of
KES 2,000 on failure to submit a return or late submission of a return by an 5% and 15% on interest paid to resident and non-resident persons
EPZ. respectively on:
• Bonds, notes or other similar securities with a maturity of at least three

Implication: This proposal seeks to move the penalty regime for filing years used to raise funds for infrastructure and other social services
income tax returns by EPZ enterprises to the Tax Procedures Act. The Bill issued after 1 July 2024; and
now proposes to charge a penalty of KES 20,000 per month for each
month the EPZ enterprise’s income tax return remains outstanding. • Bonds, notes or other similar securities with a maturity of at least three
years used to raise funds for infrastructure and other social services,
Proposed effective date: 1 July 2024 projects and asset defined under the Green bond standard and
guidelines issued after 1 July 2024.
Reduced CGT – 15% to 5%
Implications: The proposal seeks to bring into the tax net, taxpayers
Proposed provision: The Bill proposes to reduce the CGT rate from 15% to 5% that have been levering on tax exemptions of these bond to reduce
for the transfer of investments, provided that the Nairobi International Financial their effective tax rates.
Centre Authority certifies the investment to be at least three billion shillings in at
least one entity incorporated or registered in Kenya within a two-year period. However, the proposed tax rate of 5% for resident persons is lower
Additionally, the transfer of investment must occur after five years from the date than most of the resident tax rates and will therefore continue to be an
of the initial investment. incentive for investment in such securities.
For non-residents, the higher tax could be a disincentive to investing in

Implication: This is a welcome proposal which is geared toward Kenyan bonds although the government could be seeking to claw back
incentivizing foreign investors to set up their business or acquire existing some benefit from the high interest rates on government bonds.
businesses which are registered or incorporated in Kenya. The upshot of
this is to attract the significant foreign direct investments in Kenya. Proposed effective date: 1 July 2024
Non-resident air transport operator and ship-owner with no Broadening the tax net
reciprocal treaty subject to tax at 3%
Proposed provision: The Bill proposes to bring the following incomes within
Proposed provision: The Bill proposes to increase the tax rate the tax net :
from 2.5% to 3% on non-resident air transport operators and ship
owners where Kenya has no reciprocal arrangement or treaty with • investments of an amateur sporting association;
the other country.
• any registered trust scheme;
Implication: Should this proposal pass, non-resident air • Income or principal sum of a registered family trust;
transport operators or ship owners from countries without a
reciprocal arrangement or treaty will be subjected to a higher tax • Income of the National Housing Development Fund;
rate of 3%. This proposal may disincentivize such operators from
coming to Kenya due to the increased cost of operation. • Capital gains relating to the transfer of title of immovable property to family
trust; and
• Amount withdrawn from the National Housing Development Fund to
Automatic approval of accounting year end purchase a house by a contributor who is a first-time home-owner.
Proposed provision: The Bill proposes to automatically allow change

of accounting year end applications made to the Commissioner where Implication: The above provision seeks to broaden the tax base and in
a decision is not made in writing within 6 months from the date of turn shore up tax revenues.
application.
Implication: This proposal provides legal certainty to
applicants by setting clear expectations regarding decision-
making timelines in line with the principal of legitimate
expectation.
Income Tax-Corporation Tax

Licensed SEZ’s off the hook of CGT One focal point for tax rates
Proposed provision: The Bill proposes to exempt from tax gains derived Proposed provision: The Bill proposes to revoke Section 34 of the ITA
from transfer of property within a SEZ, by a licensed developer, enterprise and substitute it with a revised Section 34 providing that the rates of tax for
or operator. various items is as provided under the Third Schedule and Ninth Schedule
to the ITA where applicable.
Implications: The proposed provision brings clarity to investors who
are considering setting up shop within the SEZ framework. For such Implication: This proposal seeks to simplify reading and interpretation
investors, the exemption from CGT on transfer of property within a of the ITA by ensuring that there is one reference point for the rates of
SEZ may act as an incentive to invest in SEZs. tax.
Clarity on taxation of income from government and development
partner grant financed projects 100% Allowance on diminution - Clarification at last!
Proposed provision: The Bill proposes to bring to tax any other income Proposed amendment: The Bill proposes to introduce 100% allowance on
that is not directly related to a grant financed project under an agreement diminution in value of any implement, utensil or similar article employed in
between the government and a development partner. the production of gains or profits, not being machinery or plant in respect of
which a deduction may be made as an investment allowance.
Implications: Income earned by non-resident contractors,
subcontractors, consultants or employee that is not directly related to
these projects shall be subject to tax. Implication:
Proposed effective date: 1 July 2024 The above proposal means that expenses incurred on implements,
utensils or other similar articles will be allowable for tax purposes.
Income Tax-Corporation Tax

Investment allowance on bulk storage – end of the road!
Proposed amendment: The Bill proposes an end to the investment allowance of
150% on investments made before 31 December 2024 on the construction of bulk
storage (100,000 metric tonnes and above) and handling facilities to support the
Standard Gauge Railway operations.
Implication:
Currently, entities investing in bulk storage facilities are entitled to an

investment deduction at the rate of 150% up to 31 December 2024. Effectively,
under the current legislation, investments made with respect to these facilities
would be entitled to investment allowances in line with the Second Schedule to
the Income Tax Act, with effect from 1 January 2025.
Under the proposed amendment such facilities will enjoy reduced investment
allowance at 10% per annum.
Income Tax
Clarity on penalty on underpayment of instalment tax
Proposed provision: The Bill proposes to repeal section 72C of the ITA which
provides for penalty of 20% on underpayment of instalment taxes.
Implication: This is a welcome move as it aligns the penalty of

underpayment or non-payment of instalment tax with the Tax Procedures
Act. Therefore, the confusion encountered by taxpayers and tax
practitioners when computing penalties for underpayment or non-payment
of instalment taxes will be addressed should this proposal be enacted.
Income Tax Act –Withholding Tax

WHT on payment on digital marketplace
Proposed provisions: The Bill proposes to redefine a digital marketplace to mean an online or electronic platform which enables a person to sell or
provide goods, property or services and includes services such as ride-hailing, food delivery, freelance, professional, rental, task-based and any other
service that is not exempt from tax under the Income Tax Act.
Additionally, the Bill proposes to include the definition of “platform” to mean a digital platform or website that facilitates the exchange of a short-term
engagement, freelance or provision of a service, between a service provider, who is an independent contractor or freelancer, and a client or customer.
Further, the Bill proposes the introduction of withholding tax on income deemed to have accrued in or derived from a digital marketplace from the making
or facilitation of payments by the digital marketplace or platform. The proposed withholding tax rates are 20% and 5%, for resident and non-resident
persons, respectively.
Implication: Within a digital marketplace or platform, the key players involved are the buyer, seller and the provider of a digital marketplace.
Currently, the income earned by an owner of a digital marketplace is subject to DST at 1.5%.
However, the income earned by a seller selling goods or services through this digital marketplace or platform is not subject to tax, despite the income
being earned or accrued from Kenya.
With this proposal, the sellers or persons offering goods or services through a digital marketplace or platform will now be brought within the tax
ambit. This proposal will be effected by the owners of the digital marketplace or platform being required to withhold tax at the rate of 20% or 5% for
non-residents and residents, respectively.
This proposal will result in increased tax revenue while at the same time placing an additional compliance burden on operators of digital
marketplaces or platforms.
Income Tax-Withholding Tax Removal of minimum threshold for withholding

WHT on digital content monetisation to be a final tax for non-residents
tax on residents
Proposed provision: The Bill proposes to make withholding tax on digital content monetisation a final
tax rate for non-residents. Proposed provision: The Bill proposes to delete
the minimum amount of KES 24,000 per month, in
respect of management or professional fee or
Implication: This is a welcome move as it seeks to clarify that income on digital content training fee.
monetization earned by non-residents is not subject to additional tax in Kenya.
Proposed effective date: 1 July 2024 Implications: This means that any payments
for management, professional, or training fees
Income from supply of goods to public entity to be subjected to WHT to resident entities will be subject to a 5%
withholding tax, regardless of the amounts paid.
Proposed amendment: The Bill proposes the deferment of recognition of income on the supply of This will increase the cost of compliance since it
goods to the year of income in which payment for the supply of the goods is received. will be administratively onerous to implement.
A public entity is defined as a ministry, state department, state corporation, county department or Additionally, this proposal will have a negative
agency of the national or county government. cash flow impact especially for small traders.
Under the proposal, payment by a public entity for the supply of goods will be subject to withholding tax Proposed effective date: 1 July 2024
at 3% and 5% for resident and non-resident suppliers, respectively .
Implication:
Supply of goods has remained out of the ambit of withholding tax and the proposed amendment
seeks to bring the income from the supply of goods to a public entity under the WHT ambit.
The government entities are significant consumers of goods and the tax will seek address claims
that many briefcase suppliers to government do not pay tax.
Pay As
You Earn
Pay As YouEarn
Expansion of per-diem rates
Proposed provision: The Bill proposes to amend the tax free per diem rate from a daily
maximum of KES 2,000 to an amount not exceeding 5% of the monthly gross earning of an
employee where the employer has a policy on the payment and accounting for the per diem.
Implication: The proposal seeks to encourage employers to have proper policies that
guide employees on the accounting of per diem. The proposal also aligns the per diem
rate to accommodate the high cost of living and common practice in the industry.
Proposed Effective Date: 1 July 2024
Increase in pension allowable deduction

Proposed provision: The Bill proposes to increase the allowable pension contribution made
by an individual to a registered pension fund from KES 20,000 per month to KES 30,000 per
month
Implication: This proposal will encourage increased savings towards retirement and
increase the employees’ disposable income as the pension contribution will be deducted
from the gross salary when determining tax payable.
Pay As YouEarn
Expanded tax deductible non-cash employment benefit Better and higher quality meals for staff
Proposed provision: The Bill proposes to increase the allowable aggregate value of Proposed provision: The Bill proposes to increase the
employment non-cash benefits of whatsoever nature from the current maximum of KES allowable value of meals served to employees in a canteen
36,000 p.a to KES 48,000 p.a. or cafeteria operated or established by the employer or
provided by a third party who is a registered taxpayer meal
benefit from KES 48,000 p.a. to KES 60,000 p.a.
Implication:
This proposal will benefit employees with additional perks without increasing their
Implication: This proposal is significant given the high
taxable income and potentially higher job satisfaction. Employers may also benefit by
inflation and rising cost of living. This proposal will also
offering these perks as they can attract and retain top talent while minimizing payroll
encourage employers to offer meals to their employees
taxes.
thereby saving them money on daily expenses and
effectively enhancing their overall compensation
Proposed Effective Date: 1 July 2024 package.
Proposed Effective Date: 1 July 2024.

Unfettered benefit for public officers
Proposed provision: The Bill proposes to exempt from tax any amount paid or granted
to a public officer as reimbursement of expenditure incurred in the performance of official
duties regardless of the ownership or control of the assets purchased.
Implication: This provision creates a disparity in the treatment of reimbursements

between public and private sector workers. It is also open to abuse especially where
it appears to suggest that costs for purchase of assets can be reimbursed regardless
of who owns the assets.
Proposed Effective Date: 1 July 2024.
Pay As YouEarn
Higher interest deduction for mortgage holders Tax deductions on AHL, SHIF and post retirement medical contributions
Proposed provision: The Bill proposes to increase the Proposed provision: The Bill proposes to introduce tax deductions on contributions
deductible interest payments on loans borrowed from approved made by an employee to the Social Health Insurance Fund (SHIF) and any deduction
and registered financial institutions for the purposes of made under the Affordable Housing Act, 2023.
improvement or construction of a first residential premise and The Bill also proposes to introduce a tax deduction limited to KES 10,000 per month
occupied by the individual during the year from KES 300,000 p.a for contributions made by an individual to a post-retirement medical fund.
to KES 360,000 p.a.
Implication: These proposals will provide the much-needed reprieve for

Implication: taxpayers by lowering their taxable income and reducing their overall tax
burden.
This proposal may incentivize homeownership by reducing the
financial burden associated with purchasing a home, thus
facilitating access to housing for more individuals and families.
This proposal may also promote stability in the housing market
and stimulates economic growth by encouraging investment in NHIF, AHL and Post- retirement medical fund reliefs removed
real estate and related industries.
Proposed provision: The Bill proposes to remove the National Hospital
Insurance Fund (NHIF), post retirement medical fund, and affordable housing
Proposed Effective Date: 1 July 2024 contribution reliefs.
Implication:
This proposal goes hand in hand with the introduction of tax deduction on the
SHIF and AHL deductions, the government appears to be opting for tax
deductions rather than tax reliefs for most of these deductions.
Pay As YouEarn
Taxation of individuals under Ajira Digital Program
Proposed provision: The Bill proposes to tax the income of individuals under the Ajira Digital Program which had been given a three years
exemption beginning the 1st January, 2020 by Finance Act, 2019.
Implication:
The proposed deletion will clean up the Act by removing this exemption which has run its three years course as had initially been envisioned.
Exemption of pension benefits

Proposed provision: The Bill proposes to exempt from tax payment of pension benefits from a registered pension fund, registered provident fund, registered
individual retirement fund or National Social Security Fund (NSSF) to individuals upon attainment of the retirement age as provided by the rules of the specific fund.
The Bill also provides for exemption where a person:
 retires prior to attaining the retirement age due to ill health; or
 withdraws from the fund after the twenty years from the date of registration as a member of the fund.
Implication:
The proposed provision will allow individuals to access their retirement money earlier without incurring taxes. The proposal will also be a reprieve for retirees
who retire at 60 years who would only enjoy the exemption after attaining 65 years.
Further, the exemption for individuals who retire early due to ill health may cushion such persons from their sudden and unplanned loss on income
Value
Added Tax
Value AddedTax
Place of supply of services.
Proposed provision : The Bill proposes to amend Section 8 of the VAT Act through
the inclusion of the word “and” at the end of the opening sentence under Section 8(2)
What is a “Tax Invoice”? of the Act. For clarity purposes, Section 8 of the VAT Act provides the conditions for
the place of supply of services.
Proposed provision : The Bill proposes to introduce a definition of
the term “Tax Invoice” to include an electronic tax invoice issued in Implication :The proposed introduction of the word “and“ clarifies the specific
accordance with the Tax Procedures Act (TPA). conditions that qualify for the deeming of a supply of services made in Kenya,
provided the recipient is in Kenya, irrespective of their registration status. This
. Implication : The proposed definition is in line with the
ensures the rule is not overly broad or vague, thereby helping to enforce the
implementation of the Electronic Tax Invoice Management application and collection of VAT on supplies made in Kenya.
System (ETIMS), where the expectation is that a tax invoice for
VAT purposes should be transmitted electronically through Proposed Effective Date: 01 July 2024
TIMS except for the expressly exempted items such as
emoluments. Time of supply for exported goods.
Proposed Effective Date: 01 July 2024 Proposed Provision : The Bill proposes to define the time of supply for exported
goods by indicating that the time of supply for exported goods shall be the time when
VAT Refund amendment the registered person is in possession of the required export confirmation documents.
Proposed provision: The Bill proposes to bar taxpayers from
applying for refund of VAT credits arising from supplies made by a Implication : The objective of the proposed definition is to ensure that the exported
manufacturer to an official aid funded projects approved by the goods have exited the country. As guided by the East Africa Customs Management
Cabinet Secretary in accordance with the First Schedule of the Act (EACCMA), goods are considered to have exited the country upon the issuance
VAT Act. of Certificate of Export (COEs).
From experience, there are often delays in issuance of COEs. This proposal may be
Implication:Without the ability to reclaim VAT, the cost burden challenging to implement from a timing perspective given that information relating to
for businesses engaging in government-approved aid projects tax invoices generated by E-TIMS is transmitted in near real time for declaration in
will effectively increase. This may lead to higher overall project the VAT returns.
costs, which could either be passed on to the end consumers or
This timing difference will be in contradiction with the legal provisions on the time of
absorbed by the businesses, potentially impacting profitability.
supply of exported services.
Value AddedTax
Change in input VAT apportioning rule Claim of excess input VAT reduced to 6 months
Proposed provision : The Bill proposes to abolish the thresholds Proposed provision : The Bill proposes to delete the provision in the
used in determining whether to claim the full input VAT credit in the VAT Act allowing the taxpayers to lodge a claim for refund of excess tax
case of companies making both taxable and exempt supplies. within 24 months from the date the tax become due and payable.
Implication: Currently, entities making exempt supplies of more

than 90% of total sales are not entitled to an input VAT Implication: The objective of the proposed amendment is to align the
deduction. Conversely, entities making exempt supplies of less VAT provision relating to applying for refunds with the provision of the
than 10% are entitled to a full input VAT deduction. TPA.
As per the Medium-Term Revenue Strategy (MTRS) issued by Currently, the VAT Act provides that an entity with excess input VAT
the National Treasury, the apportioning threshold has been from supplying zero-rated supplies may apply for a refund within 24
subject to abuse which has led to loss of government revenue. months. This provision is not consistent with the provisions of the TPA
which provides that a taxpayer may apply for a refund of overpaid
Through this proposal, entities making both exempt and taxable
VAT refund with 6 months.
sales will be required to claim input VAT in proportion to its
taxable supplies in instances where they cannot directly attribute If this proposal is adopted, the administration of VAT refunds will be
input VAT to a taxable or exempt supply. aligned. More importantly, taxpayers qualifying for a VAT refund claim
resulting from zero-rated supplies will be required to lodge the claims
This also means that entities making both exempt and taxable in a timely manner to avoid losing out on the pay-out of VAT refund
sales will be required to account for reverse VAT on imported claims.
services in proportion to their exempt supplies. This will be a
departure from the current regime where entities with exempt Proposed Effective Date: 01 July 2024
sales of less than 10% are not required to account for reverse
VAT on imported services.
Value AddedTax
Refund of tax on bad debts Clarification on exemption status on goods and services for
companies operating under special framework arrangement
Proposed provision : The Bill proposes to amend the VAT Act by deleting the
requirement for the taxpayer to refund the Commissioner any tax refunded by the Proposed provision : The Bill proposes to introduce a provision that
Commissioner in cases of recovery of bad debts by the taxpayer within 60 days of excludes goods and services imported or locally purchased by
the recovery. companies operating under special framework arrangement entered
by the Government on or after 1 July 2017.
Implication: This proposal is a clean-up of the VAT Act since there is
another section of VAT Act which provides that the refund is due to the
Commissioner within 30 days. Further the VAT Act also provides that Implication: Exemption of goods and services imported or locally
where the payment is not made within the 30 days, an interest of 2% per purchased by companies operating under special framework
month will be payable to the Commissioner. arrangement was introduced through the Finance Act, 2022.
Initially, the intention was to curb the upsurge of Covid -19 variants
Proposed Effective Date:01 July 2024 and escalating cost of treating ailments such as cancer by
encouraging local manufacturing of the vaccines. The proposal
was further amended by the Finance Act 2023 to include other
VAT registration threshold: From KES 5 million to KES 8 million! manufacturing activities including refining.
Proposed provision : The Bill proposes to change the requirement for This proposal creates ambiguity as it cancels any agreements
registering for VAT from making taxable supplies worth five million shillings to signed by the government and taxpayers who are
eight million shillings. incurring/incurred significant capital investments in manufacture of
human vaccines or other manufacturing activities. If passed into
law, this is likely to curb development in the healthcare and
Impact: This proposal is in line with the Government’s campaign strategy to manufacturing industries.
create a favourable environment for small and medium enterprises by Proposed Effective Date:01 July 2024
removing the administrative burden of compliance with the VAT requirement.
This may be viewed as an incentive for small businesses to grow their
businesses and be registered for VAT in the longer term.
Value AddedTax
Transfer of a business as a going concern
Proposed provision : The Bill proposes to reclassify transfer of business on a

going concern (TOGC) from standard rated to exempt.
Impact : This is a significant change as firms investing in new businesses

or firms consolidating their businesses will have a significant upfront cash
flow saving.
While this can be beneficial to the buyer, any input VAT directly attributable
to the TOGC will not be claimable in the VAT return.
Update on the exemption of solar and wind energy generating equipment
Proposed provision : The Bill proposes to introduce a new provision which

provides that the exempt status of the specialized equipment used for the
development and generation of solar and wind energy will only be applicable
until the completion of the current projects under development.
Impact : The above proposal implies that VAT exemptions will only be
availed to solar and wind projects that have already commenced and are
about to be completed. It will be important for any new projects to be fast-
tracked and obtain the approval for exemption from the CS, Energy.
Value AddedTax
VAT on financial and insurance services
Proposed provision : The Bill has proposed to move various financial services and
insurance services from exempt to standard rated. The services are:
• Issuance of credit and debit cards;
• Telegraphic money transfer services;
• Foreign exchange transactions, including the supply of foreign drafts and international
money orders;
• Cheque handling, processing, clearing and settlement, including special clearance or

cancellation or cancellation of cheques;
• Issuance of securities for money, including bills of exchange, promissory notes, money
and postal orders;
• The assignment of a debt for consideration;
• The provision of financial services on behalf of another on a commission basis;
• Management and related insurance consultancy services;
• Actuarial services; and
• Services of insurance assessors and loss adjusters.
Impact : The above proposals are intended to expand the tax base. If the proposals are adopted, it is expected that they will increase the cost of the
various financial and insurance services which might limit the access of these services to ordinary Kenyans.
Value AddedTax
VAT on bread
Proposed provision : The Bill has proposed to

reclassify supply of ordinary bread from zero-
rated to standard rated.
Impact : The proposed change of VAT

rate on the supply of bread from zero rate
to VATable will increase the price of this
product which is a staple food for the
ordinary Kenyans, and it is expected that
there will be a lot of push back from the
public.
The proposal to change the VAT status of
ordinary bread has on several occasions
found its way into the previous Finance
Bills and subsequently dropped once the
respective Finance Acts are enacted. We
hope that the proposal this year will also
be dropped once the Finance Act, 2024 is
enacted. om the containment
Standard rated-Exempt
The Bill has proposed move the following items from standard rated to exempt:
Item Current provision Finance Bill 2024 proposed amendment
Supplies made to National Intelligence Service Standard rated Exempt
Input and raw materials used in the manufacture of mosquito repellent on

recommendation by the cabinet Secretary responsible for matters relating Standard rated Exempt
to health
Mosquito repellent* Standard rated Exempt
Tea packaging materials Standard rated Exempt
Micronutrients foliar feeds and bio-stimulants of chapter 38 Standard rated Exempt
*Exemption of the mosquito repellant and input and raw materials used in the manufacturers of mosquito repellant is intended to make the products
affordable to the public. It is expected that due to the floods, there may be high incidence of mosquitos which might translate to increased malaria cases.
The impact of the exemption might not translate to reduced costs as the entities manufacturing mosquito repellents will not be able to claim input VAT on
any inputs and therefore the input VAT expenses will be passed down as a cost to the final consumer.
Exempt –Standard rated

The Bill has proposed to amend the following items by moving them from exempt to standard rated:
Finance Bill 2024 proposed

Items Current provision
amendment
Aeroplanes and other aircrafts on unladen weight exceeding 2,000 kg but not
Exempt Standard rated
exceeding 15,000 kg.
Spacecraft (including satellites) and suborbital and spacecraft launch vehicles Exempt Standard rated
Taxable goods for direct and exclusive use for the construction of tourism facilities,
recreational parks of fifty acres or more, convention and conference facilities upon
recommendation by the Cabinet Secretary responsible for matters relating to
recreational parks.
Taxable goods for the direct and exclusive use in the construction and equipping of
specialized hospitals with a minimum bed capacity of fifty, approved by the Cabinet
Secretary upon recommendation by the Cabinet Secretary responsible for health
who may issue guidelines for determining eligibility for the exemption.
Direction finding compasses, instruments and appliances for aircrafts Exempt Standard rated

Item Current provision Finance Bill 2024 proposed
amendment
Pressure sensitive adhesive of tariff number 3506.91.00 Exempt Standard rated
Plain polythene film/LPDE of tariff number 3921.19.10. Exempt Standard rated
Plain polythene film/PE of tariff number 3921.19.10 Exempt Standard rated
PE white 25-40gsm/release paper of tariff number 4811.49.00 Exempt Standard rated
ADL 25-40gsm of tariff number 5603.11.00 Exempt Standard rated
Specially designed locally assembled motor vehicles for transportation of tourists, purchased
before clearance through Customs by tour operators upon recommendation by the competent Exempt Standard rated
authority responsible for tourism promotion.
Plant, machinery and equipment used in the construction of a plastics recycling plant. Exempt Standard rated
Musical instruments and other musical equipment, imported or purchased locally, for
exclusive use by educational institutions, upon recommendation by the Cabinet Secretary Exempt Standard rated
responsible for Education.

amendment
Betting, gaming and lotteries services Exempt Standard rated
Hiring, leasing and chartering of aircrafts, excluding helicopters of tariff numbers 8802.11.00
and 8802.12.00
Taxable goods supplied to persons that had an agreement or contract with the Government
prior to 25th April 2020 and the agreement or contract provided for exemption from value
added tax: Provided that this exemption shall apply to the unexpired period of the contract or Exempt Standard rated
agreement and upon recommendation by the Cabinet Secretary responsible for matters
relating to energy
Such capital goods the exemption of which the Cabinet Secretary may determine to promote
investment in the manufacturing sector which value of such investment is not less than two Exempt Standard rated
billion shillings

amendment
Goods and services imported or procured locally for use by the local film producers or local
film agents upon recommendation by the Kenya Film Commission, subject to approval by the Exempt Standard rated
Cabinet Secretary for the National Treasury
Taxable services for direct and exclusive use for the construction of tourism facilities,
recreational parks of fifty acres or more, convection and conference facilities
Taxable services for direct and exclusive use for the construction of specialized hospital with
accommodation facilities upon recommendation by the Cabinet Secretary responsible for Exempt Standard rated
health
All goods excluding parts of Chapter 88* ( It is important to note that certain goods (aircrafts)
under Chapter 88 have been retained under exemption).
Zero-rated -Exempt
The Bill has proposed to amend the following items by moving them from zero-rated to exempt:

Item Current provision
amendment
All inputs and raw materials whether produced locally or imported, supplied to
manufacturers of agricultural pest control products on recommendation of the Zero rated Exempt
Cabinet secretary of agriculture.*
Agricultural pest control products* Zero rated Exempt
Bioethanol vapour (BEV) stoves classified under HS code 7321.12.00 (cooking

Zero rated Exempt
appliances and plate warmers for liquid fuel)
The supply of motorcycles of tariff heading 8711.60.00. Zero rated Exempt
*The proposed reclassification of agricultural pest control products and inputs/raw materials for fertilizer manufacturing from zero rated to exempt is likely to
have significant impact on the agriculture sector and the overall economy. The reclassification is expected to increase the cost of production for the
suppliers hence passing the cost to the farmers, which will ultimately lead to an increase in the cost of food.
Zero-rated -Standard
The Bill has proposed to amend the following items by moving them from zero-rated to standard:

Item Current provision
amendment
Transportation of sugarcane from farms to milling factories. Zero rated Standard rated
The supply of locally assembled and manufactured mobile phones. Zero rated Standard rated
The supply of electric bicycles.*** Zero rated Standard rated
The supply of solar and lithium-ion batteries Zero rated Standard rated
The supply of electric buses of tariff heading 87.02.*** Zero rated Standard rated
Inbound international sea freight offered by a registered person. Zero rated Standard rated
***The Government's agenda is to encourage use of clean and environmental energy sources. The proposed reclassification of the supply of electric
bicycles and supply of buses of tariff heading 87.02 from zero rated to standard rated will lead to increase in prices which might hinder the
operationalization of this green economy agenda.
Clean –up of the VAT Act

The Bill proposes that the following goods which were in transition will now be standard rated

amendment
Partly refined (included topped crudes) - 2710.19.10 Standard rated Standard rated
Kerosene type jet fuel - 2710.19.21 Standard rated Standard rated
Illuminating kerosene (IK) - 2710.19.22 Standard rated Standard rated
Other medium petroleum oils and preparations - 2710.19.29 Standard rated Standard rated
Gas oil (automotive, light, amber, for high-speed engines) - 2710.19.29 Standard rated Standard rated
Other gas oils - 2710.19.39 Standard rated Standard rated
Natural gas in gaseous state - 2711.21.00 Standard rated Standard rated
Other natural gas in gaseous state – 2711.29.00 Standard rated Standard rated
Implication: This is a clean up of the VAT Act since the goods were subject to a VAT exemption transition period of 3 years from enactment of the VAT Act
in 2013. In 2016, the Finance Act, 2016 extended the transition status for a further two years to 2018. This implies that the goods have been standard rated
from September 2018.
Tax
Procedures
Act
Tax ProceduresAct
Tax Agents Committee Regulations Tax Relief In Cases of Recovery Difficulties
Proposed provision: The Bill seeks to amend Section 19 of the Tax Procedures Proposed provision: The Bill proposes to introduce a new
Act by insertion of the words “established by Regulations prescribed under this section, Section 37E to allow the Commissioner to refrain
Act” immediately after the words “Tax Agents Committee”. from assessing or collecting unpaid taxes under certain
conditions such as impossibility of recovery, undue difficulty,
Implication: The proposed change is a clean up that seeks to bring the Tax hardship, or other similar reasons, with the approval of the
Agent Committee within the ambit of the Tax Procedures Act. Currently, the Cabinet Secretary.
Kenya Revenue Authority Act is the enabling provision for the Tax Agent
Committee Regulations 2012. We expect that once passed into law, the Cabinet
Implication: The proposed amendment, if enacted,
Secretary shall issue new Tax Agent Committee regulations in line with their
shall allow for relief/abandonment of taxes by the
authority to do so under Section 112 of the TPA.
Commissioner because of doubt or difficulty in recovery
of tax.
Further, the Bill also proposes that the Cabinet
Cancellation of Tax Agent Licence Secretary submits a report on the amounts of taxes
abandoned to the National Assembly before 30 March of
Proposed provision: The Bill seeks to amend Section 22 of the Tax Procedures Act
the succeeding year.
by insertion of the words “on the recommendation of the Tax Agents Committee”
immediately after the words “Commissioner shall”.
The proposal would provide scope for relief to taxpayers
who are unable to settle tax liabilities upon concurrence
Implication: This amendment seeks to fortify the regulatory framework by with the Commissioner.
ensuring that tax agent license cancellations are not only at the discretion of the
Commissioner but also vetted through a committee. This proposed change will Proposed effective date: 1 July 2024
create an oversight mechanism in the tax agent licence cancellation process
and safeguard against unilateral license cancellation.
Tax ProceduresAct
Requirements of a valid electronic tax invoice Validity & Scope of Agency Notices
Proposed provision: The Bill proposes to introduce a new subsection in Proposed provision: The Bill proposes to amend Section 42(2) TPA by
Section 23 A to prescribe the information that must be captured in an introducing a one-year timeline for validity of agency notices.
electronic tax invoice to be valid.
The Bill also proposes to delete the words "taxpayer who without
Implication: The Finance Act 2023, granted the Commissioner the reasonable cause fails to comply with a notice" in subsection (13) and
authority to establish an electronic tax system for issuing tax invoices substituting therefor the words "person who without reasonable cause fails
and recording stocks. to comply with a notice issued under subsection (2)“.
The proposed amendment is aligned with the Tax Procedures Implication:

(Electronic Tax Invoice) Regulations, 2024 and seeks to prescribe the The proposed amendment shall, if passed into law, bring clarity on the
details that must be captured in the tax invoice for it to be valid. The period of validity for agency notices. The one-year validity period will
proposed amendment further buttresses the eTIMS regime and would apply in instances where the agent has not notified the Commissioner
lead to higher compliance and administrative costs for businesses that they are unable to settle the amounts due.
adapting to the new system.
The proposed deletion of the term “taxpayer” and replacement with
Proposed effective date: 1 July 2024 “person” shall, if passed into law widen the scope for KRA to issue
agency notices to persons not necessarily registered as taxpayers.
.
Proposed effective date: 1July 2024
Tax ProceduresAct
Expanding the scope for Withholding VAT Refund period for overpaid taxes.
Proposed provision: The Bill proposes to delete the proviso to Section 42A(1) that Proposed provision: The Bill proposes to amend Section 47 to
provides: make a distinction between the refund period for income tax and
“Provided that the withholding tax shall not apply to the taxable value of zero-rated all other taxes as follows:
supplies and registered manufacturers whose value of investment in the preceding
three years from the 1st July 2022 is at least three billion” “5 years in case of income tax and within 6 months from the date
on which the tax was paid in case of any other tax.”
Implication: The proposed amendment if passed into law shall mean that zero-
rated supplies and supplies made to certain manufacturers will be subject to
Implication: Currently, the TPA allows for application for
withholding VAT.
refund for other taxes, except Value Added Tax, within a
This proposal is especially punitive on those entities making zero-rated supplies period of 5 years. The proposed amendment seeks to limit
as they will be in a perpetual VAT refund position, thereby hurting their cashflow the 5-year period for refunds to income taxes only and for a
position. 6-month limit to apply for all other taxes. At present, the 6-
month limit for refunds only applies to VAT.
The six months requirement will however require taxpayers to
Penalty for failure to deduct withholding VAT
be more vigilant to safeguard against financial loss where the
Proposed provision: The Bill proposes to introduce a penalty of 10% of the amount overpayments are discovered after the six-month period.
of withholding VAT not withheld or remitted within 5 working days after the deduction.
Implication: The proposed amendment is a cleanup of the application of
penalties for not remitting withholding VAT where the penalty will apply where the
appointed agent does not remit or withhold VAT.
Currently, the 10% penalty may only apply if the person is convicted for not
remitting withholding VAT.
Tax ProceduresAct
Failure to provide information at objection stage
Implication: The additional 30 days will provide tax officials with more
time to thoroughly review and analyze the objection. This can lead to
better-informed decisions, as authorities have more opportunity to
Proposed provision: The Bill proposes to amend Section 51(4A) by deleting consider all aspects of the case, consult relevant laws, precedents, and
the requirement that the Commissioner issue an objection decision where the potentially gather additional information or clarification from the taxpayer if
taxpayer fails to provide information requested after being notified that their needed.
notice of objection was not validly lodged.
On the other hand, for taxpayers, the extended period means a longer
The proposal would see the objection disallowed rather than the Commissioner wait to receive a final decision on their objections. This can delay financial
having to issue an objection decision. planning and potentially tie up resources, especially in cases where
significant amounts of tax are in dispute.
Implication: The proposed amendment shall mean that where the

taxpayer does not provide information to KRA in support of the objection
within 7 days of being notified, the objection shall be deemed to be
automatically disallowed. Penalty for failure to integrate the Electronic Tax System
Proposed provision: The Bill proposes to amend Section 59A of the TPA
This provision if passed into law calls for vigilance on the taxpayer’s part
by introducing a penalty for failure to comply with a notice by the
to ensure that all documentation is in place before lodging objections. It
Commissioner to integrate the Electronic Tax System.
will also reduce the administrative burden for KRA in issuing objection
decisions where taxpayers have not validly lodged their objections.
The Bill further proposes to introduce a penalty for failure to submit
documents through the Electronic Tax System.
.
Implication: The proposed introduction of penalties not exceeding two
Objection Decision to be made within 90 days million shillings every month for failure to comply with integration and
submission of documents through the system will encourage compliance
Proposed provision: The Bill proposes to increase the timeframe for the and uptake of the Electronic Tax System.
Commissioner making an objection decision from 60 days to 90 days.
Tax Procedures Act

Computation of time
Implication: Currently, a late filing penalty of KES 2,000 per day is
applied where an EPZ enterprise files an income tax return late. This
Proposed provision: The Bill proposes to amend Section 77 to
means that such enterprises may pay a penalty of KES 60,000 per
exclude Saturdays, Sundays and public holidays from computation of
month for as long as the income tax return remains outstanding.
time for purposes of:
i. Submission of tax return, application, notice or other documents; This proposal seeks to move the penalty regime for filing income tax
ii. Payment of tax; or returns by EPZ enterprises to the Tax Procedures Act. Further, the
iii. Any other action under a tax law. proposed revision of the penalty may be viewed to be less punitive as
the daily penalty rate will have been reduced to KES 20,000 per
month i.e., KES 667 per day.
Implication: The proposed amendment shall, if passed into law, Proposed Effective Date: 1 July 2024
provide clarity that computation of time shall be based on working
days as opposed to the current position where if the deadline falls on a
weekend or holiday the previous working day is applicable. PIN required for registration of employees working remotely outside
Kenya for an employer in Kenya
This will provide additional time for dispute resolution but reduce the
time available for filing returns and paying tax. Proposed provision: The Bill proposes to amend the First Schedule of the
Proposed Effective Date: 1 July 2024 Tax Procedures Act to add a new requirement for obtaining a Personal
Identification Number (PIN) for employees working remotely outside Kenya
for an employer based in Kenya.
Introduction of penalties for failure to submit returns for Export
Processing Zone Enterprises
Implication: This change seeks to bring remote workers living outside
Proposed provision: The proposed amendment seeks to introduce a Kenya into the tax compliance framework when they work for a
late filing penalty of KES 20,000 per month where an EPZ enterprise does Kenyan employer. It will ensure that the KRA can account for tax
not file its income tax return by the due date. liabilities and collections from income earned through such
employment arrangements, regardless of the employee's location.
Excise Duty
Excise Duty
Reference to goods classification in the East Africa Community Common Introduction of Excise Duty Remission for spirits
External Tariff for excisable goods
The Bill seeks to allow the Cabinet Secretary National Treasury to grant
The Bill seeks to have all excisable goods classified with reference to the East Excise Duty Remission for spirits manufactured from agricultural products
African Community Common External Tariff. (except barley) manufactured in Kenya.
Implication: This proposal will ensure that there is no ambiguity in the Implication: This proposal will encourage local manufacturers of
classification of the type of goods that attracts Excise Duty. spirits in Kenya to source for the raw materials locally. This
particularly may be advantageous to the local farmers as it will
Proposed Effective Date: 01 July 2024 translate to increased demand of the agricultural products.
Introduction of Excise Duty for services offered by non-residents through

digital platforms
Removal of relief on Excise Duty paid on Excisable raw materials
The Bill seeks to introduce Excise Duty on non- residents providing excisable The Bill seeks to remove the provision on relief received by
services offered through digital platforms. manufacturers of Excisable goods and providers of internet data services
on Excise Duty paid for raw material used in the manufacture of finished
Implication: While this proposal will enhance the tax base, it is not clear products and purchase of bulk internet data, respectively.
as to how it is going to be implemented. There is a possibility that to
ease the administration, the Kenya Revenue Authority may introduce Implication: This may lead to increased revenue for the government
simplified tax registration and filing for the non-residents as seen under while pushing up the cost of the goods and services leading to
the VAT and Income Tax Acts. reduced consumption in the longer term.
Example of such services may include betting or gaming services which

may be offered through a digital platform. Proposed Effective Date: 01 July 2024
Excise Duty Exemption for excisable goods imported by National

Intelligence Service
The Bill proposes to exempt all goods, including materials supplies,
Introduction of timelines for issuance of license equipment, machinery and motor vehicles for the official use by the
National Intelligence Service.
The Bill proposes that the Commissioner, shall within 14 days of receipt of
all the required valid application documents, decide in relation to the
application of the license.
Implication: This proposal seeks to align the privileges available
to all the members of the disciplined forces with respect to
Implication: This proposal will bring certainty on the practical timelines exemption from excise duty on imported excisable goods.
within which the Commissioner can accept or deny a taxpayer the
license, helping the business with their decision-making process. Proposed Effective Date: 01 July 2024

Introduction of definition of original equipment manufacturer
Payment of Excise Duty on manufactured alcoholic beverages The Bill defines original equipment manufacturer as ‘a
manufacturer of arts and sub-assemblies who owns the intellectual
The Bill proposes to increase the period licensed manufacturers of property rights in the parts of sub-assemblies.’
alcoholic beverages are required to account for the Excise Duty from 24
hours to 5 working days.
Implication: This proposal seeks to remove ambiguity of the actual
person who will enjoy the exemption on the locally passenger
Implication: This proposal will assist in reducing the administrative manufactured vehicles. The clarity in the definition of a locally
burden of accounting for Excise Duty on daily basis. It will also help in manufactured passenger vehicle is that manufactures will have to
improving their cashflows of the manufacturers. demonstrate that 30% of the ex-factory value consist of parts
designed and manufactured in Kenya by a manufacturer who owns
Proposed Effective Date: 01 July 2024 the intellectual property rights in the parts of sub-assemblies.
Excise Duty
Exemption from Excise Duty for motorcycles
Tariff Number Tariff Description Current excise rate Proposed Excise rate
8711.10.90 Other motorcycles with internal combustion engine of a cylinder capacity KES. 12,952.83per unit KES. 0
not exceeding 50cc
exceeding 50cc but not exceeding 250cc
exceeding 800cc
8711.90.00 Other motorcycles (including mopeds) and cycles fitted with an auxiliary KES. 12,952.83per unit KES. 0
motor, with or without side-cars
Implication:
The above motorcycles were previously excisable, and this increased the price for the end user. The exemption is a welcome move as this will ensure
affordability of the same.
Proposed Effective Date: 01 September 2024
Excise Duty
Change Excise Duty rate for excisable goods of Part I to the First Schedule of the Excise Duty Act
Current description Current rate Proposed rate Proposed Effective date

Motorcycles with internal combustion piston engine of a KES. 12,952.83 per unit 10% of the value or 1 September 2024
cylinder capacity exceeding 800 with electric motor for KES.12,952.83 per unit
propulsion whichever is higher
Imported sugar confectionary of tariff heading 17.04 KES. 42.91/kg KES. 257.55/kg 1 July 2024
Wines including fortified wines, and other alcoholic beverages KES. 243.43/litre KES. 22.50/centilitre of 1 September 2024
obtained by fermentation of fruits pure alcohol
Beer, Cider, Perry, Mead, Opaque beer and mixtures of KES. 142.44/litre KES. 22.50/centilitre of 1 September 2024
fermented beverages with non-alcoholic beverages and pure alcohol
spirituous beverages of alcoholic strength not exceeding 6%
Spirits of undenatured ethyl alcohol; spirits liqueurs and other KES. 356.42/litre KES. 16/centilitre of pure 1 September 2024
spirituous beverages of alcoholic strength exceeding 6% alcohol
Cigarettes with filters (hinge lid and soft cap) KES. 4,067.03/mille KES. 4,100/mille 1 July 2024
Cigarettes without filters (plain cigarettes) KES.2,926.41/mille KES. 4,100/mille 1 July 2024
Cement clinker KES. 1.5 per Kg or 10% 0 1 July 2024

whichever is higher
Excise Duty
Change Excise Duty rate for excisable goods of Part I to the First Schedule of the Excise Duty Act
Products containing nicotine or nicotine substitutes intended KES. 1,594.50/kg KES. 2000.00/kg 1 July 2024
for inhalation without combustion or oral application but
excluding medicinal products approved by the Cabinet
Secretary responsible for matters relating to health and other
manufactured tobacco and manufactured tobacco substitutes
that have been homogenized and reconstituted tobacco,
tobacco extracts and essences.
Liquid Nicotine KES. 70/millilitre KES. 100/millilitre 1 July 2024
Implication: The proposed amendments on excise duty charged on alcoholic products is part of the government’s Medium-Term Revenue Strategy where
the government intends to review the basis of taxation to the alcohol content of the product taking into consideration the harmonization within EAC region.
In addition, the Government intends to charge excise duty based on alcohol content of the products to discourage their consumption as they pose higher
health risks.
Cement clinker is a raw material, used in the production of cement. The exemption of cement clinker from excise duty may lead to the reduction in price
cement which may spur growth in the construction sector
Excise Duty
Introduction of Excise Duty
Coal N/A 5% of the value or KES. 27,000/MT 1 July 2024

whichever is higher
Vegetable oils of tariff headings 15.11, 15.12, N/A 25% 1 July 2024
15.15 and 15.17
Implication: The introduction of Excise Duty on coal is to deter the use of coal as a source of energy as it is detrimental to the environment.
The introduction of Excise Duty on palm oil, sunflower-seeds, safflower and cotton-seed oil, other vegetable or microbial fats and oils, margarine, edible
mixtures or preparations of animal or microbial fats or oils or of fractions of different fats or oils of Chapter 15, other than edible fats and oils or their
fractions of heading 15.16 may be intended to increase government revenue, however this will increase the cost of the vegetable oil products and the
general population may seek an alternative source. e.g. Beef tallow.
Excise Duty
Exemption from Excise Duty for goods imported from East Africa Community
Tariff Number Current description
4819.10.00 Imported cartons, boxes and cases of corrugated paper or paper board and imported folding cartons, boxes and case of non-
4819.20.10 corrugated paper or paper board and imported skillets, free-hinge lid packets.
4819.20.90
04.07 Imported Birds’ eggs in shell, fresh, preserved or cooked.
07.03 Imported Onions, shallots, garlic, leeks and other alliaceous vegetables, fresh or chilled.
07.01 Imported potatoes, potato crisps and potato chips

0701.10.00
2004.10.00
2005.20.00
Implication: The exemption of the above products from Excise Duty encourages trade between East African Community Partner States.
Excise Duty
Change in Scope of excisable goods
Current description Proposed change to the scope
Imported articles of plastic of tariff heading Articles of plastic of tariff heading 3923.30.00 and 3923.90.90
3923.30.00 and 3923.90.90”;
Imported Emulsion-styrene Acrylic Styrene-acrylonitrile (SAN) copolymers
Implication:
The increase of scope of the plastic items aims to discourage the usage of plastic conveyancing items whether imported or manufactured locally.
The proposal seeks to align the description of goods in tariff line 3903.20.00 in the Excise Duty Act to what is in the East African Community Common
External Tariff. The proposal seeks to have the item whether imported or locally manufactured subject to Excise Duty which may in-turn increase
government revenue.
Excise Duty
Changes in rates for excisable services
Item Previous New rate

rate
Telephone and internet data services 15% 20%
Fees charged for money transfer services by banks, money transfer agencies and other financial service providers 15% 20%
Fees charged for money transfer services by cellular phone service providers 15% 20%
Betting 12.5% 20%
Gaming 12.5% 20%
Prize competition 12.5% 20%
Lottery (excluding charitable lotteries) 12.5% 20%
Fees charged on advertisement via the internet and social media 0% 20%
Implication
The increase in Excise Duty on telephone and internet data services, fees charged for money transfer services by banks, money transfer agencies and
other financial services and fees charged for transfer services by cellular phone may lead to a decrease in the number of transactions thus may see a
decrease in the Excise Duty collection.
The increase in Excise Duty on betting, gaming, prize competition and lottery is aimed at curtailing the consumption of services that are considered
detrimental to the citizens.
Miscellaneous
Fees & Levies Act
Miscellaneous Fees & Levies Act

Increase in Import Declaration Fee Exemption from IDF & RDL for goods imported for the official use by
Proposed provision: The Bill proposes to revise import declaration fee (IDF) the National Intelligence Service
from 2.5% to 3% of the customs value of imported goods.
Proposed provision: The Bill proposes to introduce exemption from
IDF & RDL goods imported for the official use by the National
Implication: The proposed increase of import declaration fees is aimed at Intelligence Service.
stimulating growth in local manufacturing sector by increasing the cost of
importation. The increase in fee may also generate more revenue to the
government. Implication: This proposal seeks to align all the members of the
disciplined forces to the same privileges.

Defined allocation of the IDF Funds
Proposed provision: The current Act provides that 10% of the Import
Exemption from IDF & RDL for goods used in the manufacture of
Declaration Fee collected shall be allocated to a Fund which is established
mosquito repellents
and managed under the Public Finance Management Act. The Bill proposes
that the allocated funds shall be used as follows:
i. 10% of the amount in the payment of Kenya’s contribution to the Proposed provision: The Bill proposes to introduce exemption from
African Union and other international organizations and IDF & RDL on inputs, raw materials and machinery used in the
ii. 20% of the amount to be allocated to Revenue enforcement initiatives manufacture of mosquito repellents on recommendation by the Cabinet
or programmes Secretary responsible for matters health.
Implication: The government is seeking to increase its revenue Implication: This proposal seeks reduce costs associated with the
mobilization initiatives which may lead to increase revenue collections. manufacture of mosquito repellents to help reduce malaria
However, it is unclear how the Government proposes to use the prevalence in Kenya.
remaining 70%.

Goods Previously Subjected to Export and Investment Promotion Levy Now Deleted
Tariff No Tariff Description Export and Investment Promotion levy rate
7213.91.10 Bars and rods of iron or non-alloy steel, hot-rolled, in irregularly wound coils of 17.5% of the Customs Value
circular cross-section measuring less than 14mm in diameter of cross section
measuring less than 8 mm
7213.91.90 Bars and rods of iron or non-alloy steel, hot-rolled, in irregularly wound coils of 17.5% of the Customs Value
circular cross-section measuring less than 14mm in diameter; other
4804.21.00 Sack kraft paper; unbleached 10% of the Customs value
4804.31.00 Other kraft paper and paperboard weighing 150 g/m2 or less: Unbleached 10% of the Customs value
4819.30.00 Sacks and bags, having a base of a width of 40 cm or more 10% of the Customs value
4819.40.00 Other sacks and bags, including cones 10% of the Customs value
Implication: This proposal is meant to harmonize the practice with EAC countries as the introduction of the export and investment promotion levy
increased the cost of these raw materials in Kenya making the manufactured products uncompetitive.

Goods Previously Subjected to Export and Investment Promotion Levy Retained at New rates
Tariff No Tariff Description Current Export and Investment Proposed Export and Investment
Promotion levy rate Promotion levy rate
10% of the Customs value

2523.10.00 Cement Clinkers 17.5 % of the Customs value
4804.11.00 Unbleached uncoated Kraft liner 10% of the Customs value 3% of the Customs value
Implication: This proposal is a welcome move as the Export and Investment Promotion levy rate’s reduction may lead to a reduction in prices of end
products such as cement to the end users.

Introduction of goods Subject to Export and Investment Promotion Levy
Tariff No Tariff Description Proposed Export and Investment Promotion levy rate
42.01
42.02
42.03 Articles of leather 20% of the Customs value.
42.05
64.01
64.02
64.03 Footwear 20% of the Customs value.
64.04
64.05
2207.20.00 Denatured ethyl alcohol and other spirits. 3% of the Customs value.
2208.40.00 Rum and other spirits obtained by distilling fermented sugar 3% of the Customs value.
2208.60.00 Vodka 3% of the Customs value.
Organic surface-active products and preparations for

3401.30.00 3% of the Customs value.
washing the skin
4804.29.00 Bleached sack Kraft paper 3% of the Customs value.

0401.20.00 Milk and cream of fat content by weight exceeding 1% but not 3% of the Customs value.
exceeding 6%
69.10 Ceramic sinks, wash basins, pedestals, baths, bidet, water 3% of the Customs value.
closet pans, flushing cistern, urinals and similar fixtures.
7207.11.00 Billets 10% of the Customs value.
7321.12.00 Cooking stoves for liquid fuel. 3% of the Customs value.
8711.10.90 Other motorcycles with internal combustion engine not 3% of the Customs value.
exceeding 50cc
8711.20.10 Motorcycle ambulances with internal combustion engine 3% of the Customs value.
8711.20.90 Other motorcycles with internal combustion engine exceeding 3% of the Customs value.
50cc but not exceeding 250cc
8711.30.90 Other Motorcycles with internal combustion engine exceeding 3% of the Customs value.
800cc
8711.60.00 Electric motorcycles 3% of the Customs value.

9403.10.00 Metal furniture of a kind used in offices 3% of the Customs value.
9403.20.00 Other metal furniture 3% of the Customs value.
9403.30.00 Wooden furniture a kind used in offices 3% of the Customs value.
9403.40.00 Wooden furniture a kind used in kitchen 3% of the Customs value.
9403.50.00 Wooden furniture a kind used in bedroom 3% of the Customs value.
9403.60.00 Other wooden furniture 3% of the Customs value.
9403.70.00 Furniture of plastics 3% of the Customs value.
9403.82.00 Furniture of bamboo 3% of the Customs value.
9403.83.00 Furniture of rattan 3% of the Customs value.
9403.89.00 Furniture of cane, osier or similar material 3% of the Customs value.
9403.91.00 Parts of furniture, of wood 3% of the Customs value.
9403.99.00 Parts of furniture of other material 3% of the Customs value.
9404.10.00 Mattress supports 3% of the Customs value.
Implication: The proposed amendment will enable the government to collect more revenue that will be used to spur growth of the local manufacturing
industry. This may also provide the local industries a competitive edge in the global markets.

Introduction of Eco Levy
Proposed provision: The Bill proposes to introduce an Eco Levy on certain goods manufactured in or imported into Kenya to pay for negative environmental
impact posed by such goods. The Bill introduces a Fourth Schedule were all these goods are listed.
Implication: The proposed introduction of the Eco Levy is in line with the ESG and Global Initiative on environmental protection. Given that manufacturers
and importers will be paying more for their products, the prices of the goods will increase as business operators push down the additional costs to the final
consumers.
Proposed effective date: 1 July 2024X
Description Tariff number Eco Levy rate (KES.)

Other office machines (for example, hectograph or stencil duplicating machines, addressing machines, 8472.90.00 *98 per unit/225 per unit
automatic banknote dispensers, coin-sorting machines, coin-counting or wrapping machines, pencil
sharpening machines, perforating or stapling machines)
Electronic calculating machines incorporating a printing device 8470.21.00 225 per unit
Portable automatic data processing machines, weighing not more than 10 kg, 8471.30.00 225 per unit
Automatic data processing machines comprising in the same housing at least a central processing unit and 8471.41.00 225 per unit
an input and output unit.
Automatic data processing machines presented in the form of systems. 8471.49.00 225 per unit
Processing units whether or not containing in the same housing storage, input, output units. 8471.50.00 98 per unit
Automatic data processing input or output units. 8471.60.00 225 per unit
Other units of automatic data processing machines. 8471.80.00 225 per unit
* The highlighted items with tariff number 8472.90.00 have been duplicated in the Fourth Schedule. We expect that a clean-up will be done before the bill comes into Act

Introduction of the Fourth Schedule: Goods Subject to Eco Levy
Other automatic data processing units 8471.90.00 225 per unit
Parts and accessories of the machines of Automatic data processing machines and units 8473.30.00 98 per unit
Line telephone sets with cordless handsets 8517.11.00 225 per unit
Smartphones 8517.13.00 225 per unit
Other telephones for cellular networks or for other wireless networks 8517.14.00 225 per unit
Other Telephone sets 8517.18.00 225 per unit
Base stations 8517.61.00 225 per unit
Machines for the reception, conversion and transmission or regeneration of voice, images or 8517.62.00 225 per unit
other data, including switching and routing apparatus
Other apparatus for transmission or reception of voice, images or other data 8517.69.00 225 per unit
Microphones and stands 8518.10.00 98 per unit
Sound recording or reproducing apparatus – using magnetic, optical or semiconductor media 8519.81.00 98 per unit

Transmission apparatus for radiobroadcasting or television 8525.50.00 98 per unit
Transmission apparatus incorporating reception apparatus 8525.60.00 98 per unit
High-speed television cameras, digital cameras and video camera recorders 8525.81.00 98 per unit
Radiation hardened or radiation-tolerant television cameras, digital cameras and video camera 8525.82.00 98 per unit
recorders
Night vision Television cameras, digital cameras and video camera recorders 8525.83.00 98 per unit
Other television cameras, digital cameras and video camera recorders 8525.89.00 98 per unit
Radio navigational aid apparatus 8526.91.00 98 per unit
Pocket-size radio cassette players 8527.12.00 225 per unit
Radio-broadcast receivers with sound recording or reproducing apparatus 8527.13.00 225 per unit
Other radiobroadcast receivers capable of operating without an external source of power 8527.19.00 225 per unit
Radio-broadcast receivers of a kind used in motor vehicles: combined with sound recording or 8527.21.00 225 per unit
reproducing apparatus

Other Radio-broadcast receivers of a kind used in motor vehicles: combined with sound 8527.29.00 225 per unit
recording or reproducing apparatus.
Other reception apparatus for radiobroadcasting combined, in the same housing, with sound 8527.91.00 225 per unit
recording or reproducing apparatus or a clock
Other reception apparatus for radiobroadcasting not combined, in the same housing, with 8527.92.00 225 per unit
sound recording or reproducing apparatus or a clock
Other Reception apparatus for radiobroadcasting 8527.99.00 225 per unit
Reception apparatus for television not designed to incorporate a video display or screen 8528.71.00 1,275 per unit
Unassembled colour reception apparatus for television, whether or not incorporating radio- 8528.72.10 1,275 per unit
broadcast receivers or sound or video recording or reproducing apparatus
Unassembled monochrome reception apparatus for television, whether or not incorporating 8528.73.10 1,275 per unit
radio-broadcast receivers or sound or video recording or reproducing apparatus
Assembled monochrome reception apparatus for television, whether or not incorporating 8528.73.90 1,275 per unit
radio-broadcast receivers or sound or video recording or reproducing apparatus

Colour cathode-ray television picture tubes 8540.11.00 1,800 per unit
Monochrome cathode-ray television picture tubes 8540.12.00 1,800 per unit
Television camera tubes, image converter and other photocathode tubes. 8540.20.00 1,800 per unit
other instruments and apparatus, specially designed for telecommunications 9030.40.00 98 per unit
New pneumatic tyres, of rubber. 40.11 1,000 per unit
Retreaded or used pneumatic tyres, of rubber. 40.12 1,000 per unit
Diapers 9619.00.90 150 per Kg
Primary cells and primary batteries. 85.06 750 per Kg
Electric accumulators, including separators. 85.07 750 per Kg
Plastic packing materials 39.23 150 per Kg
Other Acts
Affordable Housing Act

Proposed amendment: The Bill proposes to delete Section 54 of
the Affordable Housing Act that prevented owners of affordable
housing units to sell their units without prior written consent of the
Affordable Housing Board.
Implication:
This would be a positive development for prospective

owners of affordable housing units because they would
not face restrictions in onward sale of their units. It would
also ensure purchasers’ legal rights to use or dispose of
their property as they see fit, potentially facilitating a
more fluid housing market.
The Industrial Training Act

Proposed amendment: The Bill proposes to amend
the Industrial Training Act to extend the
Commissioner’s authority of collection of the training
levy to also include powers provided under the Tax
Procedures Act.
Previously, it only referenced the Commissioner’s

powers under the KRA Act and Income Tax Act.
Implication:.
The proposed amendment will further

strengthen the legal framework for
enforcement and collection of the industrial
training levy by the KRA, under the auspices
of the Tax Procedures Act.
Data Protection Act

Proposed amendment: The Bill proposes to exempt the
disclosure of personal data by data controllers/processors
for tax or duty assessment, enforcement, or collection
purposes under a written tax law.
Implication:.
The Data Protection Act defines personal data as “any

information relating to an identified or identifiable natural
person.”
The proposed exemption seeks to allow disclosure of
personal data for assessment, enforcement, or
collection of taxes. This would allow entities who hold
individual’s data e.g. telecommunication companies to
share with KRA upon request.
In the past, some of the data controllers/processors
have been subject to lawsuits from various parties who
have been adversely affected by sharing of their
information with KRA. The new proposal would mean
such sharing of information for tax purposes would be
within Kenya’s data protection laws.
Public Finance Management Act

Proposed provision: The Bill proposes to introduce
provisions allowing the Public Sector Accounting Standards
Board to introduce a framework for implementation of accrual
accounting in the government and further, to establish a risk
management framework.
The Bill further proposes that the implementation of accrual

accounting be implemented over a 3-year transition period.
Implication: The Public Finance Management Act

empowers the Public Accounting Standards Board to
provide frameworks and set generally accepted
standards for the development and management of
accounting and financial systems by all State organs
and public entities.
The proposed amendments would ensure
government accounting is in line with international
accounting standards and strengthen oversight of the
government’s financial operations.
Kenya Revenue Authority Act

Proposed provision: The Bill proposes to amend the
First Schedule and remove the Civil Aviation Act from the
list of legislation for which KRA has collecting mandate.
Implication: The proposed amendment is a

clean-up because the Civil Aviation Act empowers
the Kenya Civil Aviation Authority (KCAA) as the
government authority providing oversight and also
responsible for imposition of fines and penalties
under the Act.
Contact us
Peter Kinuthia Stephen Ng'ang'a

Partner & Head of Tax & Partner
Regulatory Services Tax & Regulatory Services
KPMG East Africa KPMG East Africa
T: +254 709 576 215 T: +254 709 576 259

E: pkinuthia@kpmg.co.ke E: swnganga@kpmg.co.ke
Clive Akora Sandeep Main

Partner Partner
Tax & Regulatory Services Tax & Regulatory Services
KPMG East Africa KPMG East Africa
T: +254 709 576 245 T: +254 709 576 177
E: cakora@kpmg.co.ke E: sandeepmain@kpmg.co.ke
kpmg.com/socialmedia
Disclaimer
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to
provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in
the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2024. KPMG Advisory Services Limited, a Kenyan Limited Liability Company and a member firm of the KPMG global organization of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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Finance Bill,

Proposed effective date: 1 July 2024

Proposed effective date: 1 July 2024

Proposed effective date: 1 July 2024

Proposed effective date: 1 July 2024

Proposed provision: The Bill proposes to define ‘donation” to mean a

Implication: The definition provides clarity as to what constitutes a

Proposed effective date: 1 July 2024

Companies subject to interest restriction with respect to non-

With this proposal, investment in spectrum licenses will be treated

Proposed effective date: 1 July 2024

Definitions: The provisions shall not apply to;

NET INCOME OR LOSS

Excess profit Combined effective tax rate (%)

Income Tax-CorporationTax WHT on interest on infrastructure and social bonds

• Bonds, notes or other similar securities with a maturity of at least three

For non-residents, the higher tax could be a disincentive to investing in

Proposed provision: The Bill proposes to automatically allow change

Proposed effective date: 1 July 2024

Income Tax-Corporation Tax

Income Tax-Corporation Tax

Currently, entities investing in bulk storage facilities are entitled to an

Implication: This is a welcome move as it aligns the penalty of

Proposed effective date: 1 July 2024

Income Tax Act –Withholding Tax

Proposed effective date: 1 July 2024

Income Tax-Withholding Tax Removal of minimum threshold for withholding

Proposed Effective Date: 1 July 2024

Increase in pension allowable deduction

Proposed Effective Date: 1 July 2024

Proposed Effective Date: 1 July 2024.

Implication: This provision creates a disparity in the treatment of reimbursements

Proposed Effective Date: 1 July 2024.

Implication: These proposals will provide the much-needed reprieve for

Exemption of pension benefits

Implication: Currently, entities making exempt supplies of more

Proposed Effective Date: 01 July 2024

Proposed provision : The Bill proposes to reclassify transfer of business on a

Impact : This is a significant change as firms investing in new businesses

Proposed Effective Date: 01 July 2024

Update on the exemption of solar and wind energy generating equipment

Proposed provision : The Bill proposes to introduce a new provision which

Proposed Effective Date: 01 July 2024

• Issuance of credit and debit cards;

• Telegraphic money transfer services;

• Cheque handling, processing, clearing and settlement, including special clearance or

• The assignment of a debt for consideration;

• The provision of financial services on behalf of another on a commission basis;

• Management and related insurance consultancy services;

• Actuarial services; and

• Services of insurance assessors and loss adjusters.

Proposed Effective Date: 01 July 2024

Proposed provision : The Bill has proposed to

Impact : The proposed change of VAT

Item Current provision Finance Bill 2024 proposed amendment

Supplies made to National Intelligence Service Standard rated Exempt

Input and raw materials used in the manufacture of mosquito repellent on

Mosquito repellent* Standard rated Exempt