This archive report was first published on 30 June 2019.
Kenya's new financial year begins on Monday, July 1, 2019, with several tax proposals taking effect. Treasury Cabinet Secretary Henry Rotich introduced the measures in his 2019/20 budget statement.
One of the key proposals is the exclusive preference in procurement of motor vehicles and motor cycles to firms that have assembly plants in Kenya. This move aims to spur growth of local auxiliary industries and create employment opportunities for the youth.
Government agencies operating in rented properties are set to renegotiate their contracts to ensure a standard rate, following the standardisation of procurement of office accommodation. This may lead to a collision path with landlords.
Implementation of electronic travel cards for public servants is also expected to end the gravy train and wasteful expenditure on domestic and foreign assignments.
However, the implementation date of new taxes on alcohol has been pushed from July 1 to October 1, giving Kenyans three more months to enjoy cheaper prices of their favourite wines and whiskeys.
Other sectors to be affected include betting companies, which will pay a 10 per cent excise duty on the amount wagered or staked. The implementation of this policy will wait until Parliament passes the Finance Bill and will be effective latest on January 1.
Players in the digital economy, security services, cleaning and fumigation services, catering services, transportation of goods, sales promotion, and marketing and advertising services will also start paying withholding taxes on their income.
The customs measures will be communicated through the EAC Gazette and will be effective from July 1. The proposals that take effect Monday include those that affect the steel and timber industries, with import duty on raw timber slashed from 10 per cent to 0 per cent.
Those transferring property will pay a capital gains tax at the rate of 12.5 per cent, up from 5 per cent. The measures are expected to help fund the Sh3 trillion budget.
