This archive report was first published on 25 June 2020.
Kenya's National Assembly Adopts Finance Bill 2020 with Amendments ¶
On June 25, 2020, Kenya's national assembly adopted the proposed amendment to the finance bill 2020, extending the lower and upper limit of the residential rental income tax.
The bill, which was adopted with amendments, shifts the lower limit from KSh 144,000 to KSh 288,000 and the upper limit from KSh 10 million to KSh 15 million. Landlords who earn an annual rental income of between KSh 288,000 and KSh 15 million will pay a tax rate of 10% of their gross income.
Legislators also decided to exempt monthly pensions granted to people 65 years and above from tax, reversing an earlier proposal to delete this exemption. They argued that this would discourage people from saving into pension schemes.
Other key amendments include the establishment of a Roads Maintenance Levy fund, which will consist of proceeds from the levy and transit tolls levied on motorists. The Kenya Revenue Authority (KRA) will also have a new revenue source from agency fees paid for collecting revenue on behalf of the county government and government agencies.
Additionally, the gain accruing to a company on any transfer of machinery classified in the second schedule will not be chargeable to tax. The exemption of goods imported or purchased locally for the direct and exclusive use in the implementation of projects under special operating framework arrangements with the government will also continue for existing projects for the remaining period of the agreement.
The KRA commissioner will adjust the specific rate of excise duty once every year to take into account inflation, using a formula specified in the First Schedule. The notice of excise duty adjustment will be tabled in Parliament, which will consider the notice and make a resolution to either approve or reject it within 28 days.
Finally, the house adopted to reduce the thresholds for excise duty for certain categories of alcoholic drinks, including beer, cider, perry, mead, opaque beer, and mixtures of fermented beverages with non-alcoholic and spirituous beverages of alcohol strength not exceeding 6%.
