The Finance Bill 2024 introduced significant tax measures. The National Treasury plans to reinstate these measures. They were previously scrapped due to protests in June. This decision aligns with the International Monetary Fund‘s (IMF) conditions.
The upcoming Tax Laws Amendments Bill will impose higher taxes. These taxes will apply to betting, phone calls, and data. They will take effect before June 2025.
The goal is to enhance revenue collections. Treasury officials recently met with the IMF in Washington. The IMF urged Kenya to improve tax revenues. It also advised decreasing borrowing. The IMF noted that Kenya has underperformed in revenue collection. The country breached loan conditions as well. This includes a recent tranche of Sh78.3 billion ($606.1 million).
Consequently, the National Treasury is reintroducing withdrawn taxes. These taxes were part of the Finance Bill 2024.
Treasury Cabinet Secretary John Mbadi stated that new taxes aim to reduce borrowing. They will support cash-strapped devolved governments. However, reactions from youth-led protest groups are uncertain. This raises concerns about possible renewed demonstrations.
The original Finance Bill suggested higher levies on essentials. These essentials include items like bread and diapers. Mbadi noted that proposals reflect public feedback from September 17. The Treasury received 35 submissions from stakeholders. This may lead to higher costs for internet and phone calls. Excise duties are expected to rise from 15% to 20%.
Additionally, the Railway Development Levy will increase to 2.5%. There will be a 5% withholding tax for digital marketplace operators. Non-residents will face a 20% withholding tax.
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