The Finance Bill, 2023 was presented in Parliament on Thursday, 4th May 2023. This newsletter covers the economic highlights of the proposed budget and tax changes as follows:
- Introduction of taxation on digital tax assets
- Restriction of interest on foreign exchange losses
- Proposal to include a new pay-as-you-earn (PAYE) tax bracket of 35% for any employment income above KShs. 500,000 per month
- Proposal to reduce the income tax rate on monthly rental income and withholding on rental income from 10% to 7.5%
- Proposal to increase the Turnover Tax rate from 1% to 3% and to alter its bracket to KShs. 0.5 million – KShs. 15 million
- Exported taxable services are now proposed to revert to exempt from VAT
- Transfer of business as a going concern would also be made exempt from VAT
- Removal of provision on application of waiver of penalty and interest
- Increase in tax shortfall penalty on deliberate omission from 75% to 200%
- Reduction of the rate of IDF from 3.5% to 2.5% of customs value and RDL from 2.5% to 1.5% of customs value
- Introduction of a new Levy on specified goods; the Export and Investments Promotion Levy
- The Bill proposes to introduce a 20% deposit requirement for taxpayers appealing to the High Court from the Tax Appeals Tribunal refundable if the High Court decides in favour of the taxpayer