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The Finance Act (“the Act”), 2023 received Presidential assent on 26th June 2023. Most of the changes will be effective from 1st July 2023, which is the Government’s fiscal year, while a few will be effective from 1st September 2023 and 1st January 2024.
Most of the proposed changes in the Finance Bill, 2023 have been maintained in the Act with a few additions. This newsletter covers changes that were maintained in the Finance Act (maintained in colour grey), new additions that were not previously included in the Finance Bill (highlighted in colour blue) and proposals in the Finance Bill that were not passed as law by the Finance Act (highlighted in colour green).
Some of the legislative highlights are as follows:
- Removal of provision on application of waiver of penalty and interest.
- Increase in tax shortfall penalty on deliberate omission from 75% to 200%.
- The removal of 0% of fertiliser of Chapter 31 and their inputs, agricultural pest control products and their inputs and transportation of sugar canes from farmer to milling factories.
- The removal of exemption on goods and services used for the construction of tourism facilities, recreational parks, convention and conference services.
- The removal of the exemption of goods of tariff heading 3003.90.90, 3002.90.00.
- Exempting from VAT transfer of business as a going concern.
- The removal of exemption of capital goods used in the manufacturing sector.
- Removal of exemption plant, machinery and equipment used in the construction of a plastics recycling plant.
- Removal of exemption of taxable services for direct and exclusive use for the construction of specialized hospitals with accommodation facilities.
- Removal of 0% of inputs of medicaments supplied to pharmaceutical manufacturers in Kenya.
- The proposal 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.