Editor's Review

The Bills propose new tax measures and also reliefs for employed Kenyans.

Treasury Cabinet Secretary John Mbadi has unveiled plans to introduce new tax measures and laws.

In an explainer published by the CS on Friday, November 1, the government is proposing to introduce three amendment bills that have various proposals to increase various tax rates and also offer relief to employed Kenyans.

The three proposed bills include the proposed Tax Laws (Amendment)Bill 2024, the Tax Procedures (Amendment) Bill 2024 and the Public Finance (Amendment) Bill).

File image of President William Ruto chairing a Cabinet meeting.

Proposed Tax Measures

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Digital

One notable tax proposal that will be introduced in the new bill is the taxation of various businesses conducted online. The targetted businesses include taxi hailing, food delivery services and freelance and professional services.

"The Bill seeks to amend section 3 of the Income Tax in the definition of the term "digital marketplace by including "ride-hailing services" "food delivery services" "freelance services" "professional services etc.

"This definition is relevant for the taxation of income accruing from business carried out over the internet or an electronic network including through the digital marketplace. This proposal is to expand the tax base by bringing the income of the owners of the digital platforms that offer the above services into the tax net," read the explainer in part.

Minimum Top-Up Tax

Additionally, the Treasury is seeking to introduce a new tax targeting multi-national companies that are operating in the country that have a turnover of over Ksh100 billion.

"The Bill seeks to introduce a tax to be known as the minimum top-up tax. The tax is to provide for the Minimum Top-Up Tax to align the Kenya taxation of multinationals with the global best practice that prevents tax base erosion by providing that these companies pay a minimum effective tax rate of 15%," read the proposal in part.

"This is an additional tax that will be payable in Kenya by a Multi-National Enterprise which has an effective tax rate of less than 15%. The Multi-National Enterprise must have a consolidated annual turnover of 100 billion shillings."

SHA

In the new proposals, the government is also seeking to make SHA contributions deductibles. Through this move, employed Kenyans will get relief as their taxable income will reduce.

Simply put, the government will only tax the amount one will receive after the SHA contributions have been deducted from the gross pay.

"The Bill proposes to amend the Income Tax Act to provide that the following amounts shall be allowable deductions in the computation of taxable income of individual's contributions to the Social Health Insurance Fund, the amount deducted in accordance with affordable Housing and contributions to a post-retirement medical fund up to fifteen thousand shillings (15,000)," Mbadi explained.

"These amendments will boost disposable income and enhance the employee's take-home pay."

Railways Development Levy

Another major tax proposal is to increase the Railway Development Levy from 1.5 per cent to 2.5 per cent.