This archive report was first published on 30 June 2019.
New Taxes to Take Effect in Kenya Starting Monday ¶
As of Monday, July 1, 2019, various sectors in Kenya will be affected by new taxes introduced by the government to fund the Sh3 trillion budget.
Treasury Cabinet Secretary Henry Rotich made several proposals in the 2019/20 budget statement, some of which will take effect immediately, while others will be staggered to October and January next year.
One of the key proposals is the increase in excise duty on cigarettes, wines, and spirits by 15 per cent. This means that the prices of a 750ml bottle of wine will increase by at least Sh18, while a bottle of whisky will go up by Sh24 to Sh182 for a 750ml bottle.
Additionally, gamblers will be required to 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, 2020.
Other sectors to be affected include the digital economy, which encompasses online and e-commerce firms. Taxing the digital economy has always been hard due to the unparalleled reliance on intangibles.
Players in the security services, cleaning and fumigation services, catering services offered outside hotel premises, transportation of goods (excluding air transport services), sales promotion, and marketing and advertising services will also start paying withholding taxes on their income.
The proposals are expected to help the government raise Sh468.4 billion from salaried employees in Pay As You Earn taxes, an increment of about Sh65.1 billion more compared to the current financial year.
Those who buy second-hand motor vehicles will help the national Treasury raise Sh224 billion, while selling properties at a profit will raise the government Sh4.6 billion in taxes.
According to Treasury Cabinet Secretary Henry Rotich, the measures are aimed at enhancing tax compliance and dealing with the challenges of bringing the digital economy under the tax net.
