Months after thousands of Kenyans marched to the streets to protest the failed Finance Bill 2024, the government has again announced a slew of tax measures in an effort to reduce the budget deficit, which now stands at Ksh500 billion.
The government has suggested imposing a levy on both domestic and foreign investors looking to purchase infrastructure bonds.
The National Treasury developed the newest government Tax Laws Amendment Bill, which was tabled in the National Assembly by Majority Leader Kimani Ichung’wah.
The measure proposes a 5% tax on the interest earned by investors who acquire infrastructure bonds.
The Central Bank of Kenya (CBK) sells debt-based government securities called infrastructure bonds.
The tax amendment bill also proposes increasing the excise duty on imported sugar from Ksh5 to Ksh7.50 per kg.
The bill does, however, propose an exemption from tax increases for sugar imported by a registered manufacturer and raw sugar imported for processing by a licensed sugar refinery.
According to the new tax proposal, the government will also impose excise duty on imported electric transformers and certain parts of a vehicle at the rate of 25 percent.
In the new piece of legislation, Imported printer ink would bear taxation at the rate of 15 percent.
The tax does not apply to ink produced in East African Community partner countries that adhere to the East African Community Rules of Origin.
President Ruto’s administration also intends to levy a 16 percent tax on planes, helicopters, spacecraft, and specially designed locally made motor vehicles used to transport tourists.
Additionally, the law proposes a 15% excise levy on internet and social media costs.
Despite projected tax increases on many goods and services, the government has exempted some other commodities from taxation.
The government’s new tax law proposes exempting locally produced electric vehicles from excise duty in order to encourage the local assembly industry and create jobs for Kenyans.
The administration has also proposed exempting pension payments from income tax, including gratuities and other payments made by registered pension fund corporations such as the National Social Security Fund (NSSF).
The law also attempts to exempt non-resident contractors, subcontractors, consultants, or employees who work on a project funded entirely by a grant from paying income taxes.
If the new tax law is passed by Parliament, goods used in the manufacture of baby diapers, sanitary towels, and tampons will be excluded from taxation.
Imported inputs and raw materials supplied to makers of agricultural pest control goods, agricultural pest control products, certain fertilizers, and inputs or raw materials for fertilizer manufacturing would be tax-exempt.
