This archive report was first published on 9 November 2019.
On November 7, 2019, President Uhuru Kenyatta signed the Finance Act 2019 into law, bringing with it a raft of new taxes that will impact Kenyans.
The Act, which was passed on November 7, 2019, has been making headlines for its repeal of the interest rate capping law, but it also introduced several tax provisions that will affect ordinary Kenyans.
One of the most notable changes is the introduction of a 20% excise duty on the amount staked in the betting industry. This is a significant increase from the previous 15% tax on revenues, and it will add to the already burdensome tax regime in the industry.
The betting industry is not the only one to be affected by the new taxes. The Finance Act 2019 also introduces a new excise duty on alcohol and cigarettes, with nearly all tobacco products seeing a jump in excise rates per mille. Fruit wines will now be subject to a new excise rate of Ksh.189 per litre, while spirits with an alcohol content above 10% will be charged Ksh.253 per litre.
Another contentious provision in the Finance Act 2019 is the re-categorization of the supply of maize, cassava, and wheat flour from zero-rated to exempt supplies. This means that maize milling firms will no longer be able to recoup their previously recoverable input value-added tax (VAT), which could lead to an increase in unga prices.
The Finance Act 2019 also introduces provisions for taxing income accrued from the digital marketplace. However, the Act fails to provide for how the new tax is to be implemented, instead passing the buck to the Treasury's Cabinet Secretary to provide regulations.
Across the globe, countries are still grappling with the approach to taxing the digital sector, and Kenya is no exception. Tax consultants welcome the introduction of the provisions on the industry, observing the global trend towards taxing online commerce.
The Finance Act 2019 is aimed at raising an additional Ksh.37 billion in ordinary revenues, with the Kenya Revenue Authority (KRA) expected to raise its collections to Ksh.1.85 trillion by the end of June 2020. To enhance compliance, the Act has rationalized tax procedures to provide for uniformed sanctions on non-compliant tax payers.
