Introduction

The Finance Bill, 2024 was presented in Parliament on Thursday 9th May 2024. This newsletter covers the economic highlights of the proposed budget and tax changes as follows:

  • Introduction of taxation on motor vehicles at 2.5% on insured value, subject to a minimum of KShs. 5,000, and a maximum of KShs. 100,000
  • Introduction of minimum top up tax 
  • Repealing of DST and introduction of significant economic presence tax at an effective tax rate of 6%
  • Per diem to be revised on approved employer policy up to a maximum of 5% per day of the employee’s gross monthly salary
  • Non-taxable benefits threshold now increased to KShs. 48,000 per year from KShs. 36,000 and meal allowance limit now increased to KShs. 60,000 per year from KShs. 48,000 per year
  • Pension contribution limit has been increased to KShs. 30,000 per month (KShs. 360,000 per year) from KShs. 20,000 (KShs. 240,000 per year) 
  • Contributions paid for Affordable Housing Levy and SHIF to be an allowable deduction and not treated as a relief
  • Introduction of Advance Pricing Agreements(APA)
  • Removal of exemption from income tax on income earned by a registered family trust and CGT on transfer of property to a registered family trust
  • VAT registration threshold increased to KShs. 8,000,000 from KShs. 5,000,000
  • Time of supply for export of goods is when the exporter is in possession of all required export confirmation documents
  • Transfer of business as a going concern would also be made exempt from VAT
  • Supply of ordinary bread now proposed to be 16% from current zero rate
  • VAT proposal on financial services
  • Proposal for extension of time for the Commissioner to give an objection decision from 60 days to 90 days
  • Introduction of an Eco Levy to ensure manufacturers and importers pay for the negative environmental impacts of the goods
  • IDF to increase from 2.5% to 3% of customs value

     

Caveat

This newsletter has been prepared by RSM (Eastern Africa) Consulting Ltd, and the views are those of the firm, independent of its directors, employees and associates. This newsletter is for general guidance, and does not constitute professional advice. Accordingly, RSM (Eastern Africa) Consulting Ltd, its directors, employees, associates and its agents accept no liability for the consequences of anyone acting, or refraining from acting, in reliance on the information contained herein or for any decision based on it. No part of the newsletter may be reproduced or published without prior written consent. RSM (Eastern Africa) Consulting Ltd is a member firm of RSM, a worldwide network of accounting and consulting firms. RSM does not offer professional services in its own name and each member firm of RSM is a legally separate and independent national firm.

 

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