The Kenya Kwanza government on Tuesday, June 18 removed major tax proposals in the controversial Finance Bill 2024 following uproar from Kenyans.
Addressing the media at State House after a Kenya Kwanza Parliamentary Group Meeting, National Assembly Finance Committee Chair Kuria Kimani said the 16 percent VAT on bread has been removed.
The Molo MP intimated that the move was made in order to protect Kenyans from the increased cost of living.
“We are all in agreement that there are two things we must do. One of them is to protect Kenyans from increased cost of living and therefore the proposed 16 percent VAT on bread has been dropped,” said Kuria.
Other taxes that have been dropped include; VAT on transportation of sugar, VAT on financial services and foreign exchange transactions, excise duty on vegetable oil, 2.5 percent Motor Vehicle Tax and the tax on mobile money transfer.
On the Eco Levy, Kimani noted that locally manufactured products will not attract the levy as it will only apply to imported finished products.
“It is crucial to point out that Eco Levy is being levied on imported finished products. Locally manufactured products will, therefore, not attract the Eco Levy. Locally assembly and manufacturing will help boost Kenya’s manufacturing capacity, create jobs, and save foreign exchange.
“Consequently, locally manufactured products, including sanitary towels, diapers, phones, computers, tyres and motor cycles, will not attract the Eco Levy,” the Molo MP stated.
Further, the government announced that the Housing Fund and Social Health Insurance will become income tax deductible.
The threshold for VAT registration has been increased from KSh5 million to KSh8 million and the responsibility for electronic invoicing ETIMS, recently introduced by KRA receded from farmers and small businesses with a turnover of below Ksh. 1 million
On the other hand excise duty on alcoholic beverages will now be taxed on the basis of alcohol content and not volume. The higher the alcohol content the more excise duty it will attract.
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