Major Victory for Kenyans as Government Drops Controversial Tax Proposals from Finance Bill 2024

In a hurry? Here’s a quick summary…

• The Kenyan government has dropped several controversial proposals from the Finance Bill 2024, including the 16% VAT on bread and financial services, due to public pressure.
• Other changes include eliminating excise duty on vegetable oil, exempting small businesses from eTIMS, and increasing the VAT threshold for SMEs.

Kenyans have welcomed relief as the government has dropped several controversial proposals from the Finance Bill 2024, which is set to be tabled in the National Assembly on Tuesday afternoon. 

The most notable withdrawal is the plan to impose a 16 percent Value Added Tax on bread, financial services, and foreign exchange transactions.

The announcement followed a meeting of Members of Parliament allied with the ruling Kenya Kwanza coalition, led by President William Ruto, at State House Nairobi.

Read Also:

Governor Mutahi Kahiga Criticizes Government Amid Growing Rift Between Ruto and Gachagua

Joho Urges MPs to Reject 2024 Finance Bill Regardless of Party Leadership

President Ruto Jets Back in Kenya Airways Flight After Italy & Switzerland Trip

Jackie Matubia Breaks Down as She Reveals Father’s Stage 4 Cancer Diagnosis

Key Changes to the Finance Bill 2024:

• The proposed 16 percent VAT on bread has been removed.
• Excise duty on vegetable oil has been eliminated.
• No increase in transaction fees for mobile phone transfers.
• Statutory deductions like the Housing Levy and SHIF will be tax-deductible, increasing disposable income.
• Eco-levy will only apply to imported finished products, exempting locally manufactured items including diapers and sanitary towels.
• VAT threshold increased from Ksh.5 million to Ksh.8 million, exempting SMEs with turnover under Ksh.8 million from VAT registration.
• Small businesses with turnover under Ksh.1 million will be exempt from eTIMS.
• Excise duty on imported eggs, onions, and potatoes, making locally produced items more competitive.
• Excise duty on alcohol will be based on content, with higher duty for higher alcohol content.
• Increased allowable pension contributions for tax purposes from Ksh.20,000 to Ksh.30,000 monthly.
• Allocation to hire all 46,000 JSS intern teachers permanently and recruit an additional 20,000.The motor vehicle tax proposal has been dropped, preventing a potential impact on the insurance business.
• VAT on the transportation of sugarcane from farms to milling factories has been removed.