NAIROBI, Kenya- National Assembly Finance Committee has adopted major changes to the controversial Finance Bill 2024, after a major public outcry.
The changes were revealed during a Kenya Kwanza Parliamentary Group hosted by President William Ruto on Tuesday, in State House, Nairobi.
Key highlights from the briefing include the removal of the 16 percent Value Added Tax (VAT) on bread and the transportation of sugar stands out as a major relief for consumers, scrapping of VAT on financial services and foreign exchange transactions, the removal of excise duty on vegetable, and elimination of the 2.5p.c Motor Vehicle Tax.
The levies on the Housing Fund and Social Health Insurance will now be income tax deductible, significantly increasing employees’ take-home pay.
“This means these levies will not attract income tax, putting much more money in the pockets of employees,” the statement read.
In a bid to support local manufacturing, the Eco Levy will now only apply to imported finished products.
Locally manufactured items, such as sanitary towels, diapers, phones, computers, tyres, and motorcycles, will be exempt.
“Locally assembled and manufactured products will help boost Kenya’s manufacturing capacity, create jobs, and save foreign exchange,” the statement noted.
Further easing the burden on small businesses, the threshold for VAT registration has been raised from KSh 5 million to KSh 8 million, meaning many small enterprises will no longer need to register for VAT.
Additionally, the responsibility for electronic invoicing (ETIMS), recently introduced by the Kenya Revenue Authority (KRA), has been lifted for farmers and small businesses with a turnover below Sh1 million.
To protect local farmers, excise duty has been imposed on imported table eggs, onions, and potatoes.
Meanwhile, excise duty on alcoholic beverages will now be based on alcohol content rather than volume, encouraging the production of safer and potentially cheaper alcohol.
Pension contributions’ exemption has been increased from KSh 20,000 to KSh 30,000 per month, providing greater financial relief for contributors.
The PG also announced that KSh 18 billion has been allocated for the employment of all 46,000 Junior Secondary teachers currently on internship, with additional funds to hire 20,000 interns next month. This policy aims to transition teachers from internships to permanent and pensionable terms.
President Ruto, addressing the PG, reaffirmed the commitment of the Executive and Legislature to make difficult but necessary decisions for the nation’s progress.
He highlighted the success of the previous year’s Finance Bill 2023 proposals and commended national institutions for their effective democratic processes.
