3 Taxes & Penalties to Take Effect From September
The Finance Act, which was signed into law by President William Ruto on June 29, stipulates that three new tax provisions will go into effect on Friday, September 1.
The new tax measures include the Digital Asset tax, Electronic Tax Invoices, and Export and Investment Promotion Levy rates on essential products such as Portland cement clickers.
On the other hand, as detailed below, various tax penalties and tax amnesty rules will go into effect.
Digital Asset Tax
The 3 percent tax is imposed on income derived from the transmission or exchange of digital assets such as cryptocurrencies.
“A digital asset consists of anything of value that is intangible, as well as cryptocurrencies, token codes, and numbers held in digital form and generated through cryptographic means or otherwise, regardless of the term used.
The Act states, in part, that “the owner of a platform or the person who facilitates the exchange or transfer of a digital asset shall deduct the digital asset tax and remit it to the Commissioner.”
According to the Act, taxes must be remitted within five business days of deduction.
Miscellaneous Fees and Levies
The 2023 Finance Act amended the Miscellaneous Fees and Levies Act of 2016 and enacted an Export and Investment Promotion Levy on notable commodities including iron, non-alloy steel, kraft paper (cardboard), and sacks.
The tax is imposed on domestic manufacturers who export their products abroad.
Cement clickers used to produce Portland cement, as well as iron or nonalloy steel bars and rods, will be subject to a tax of 17.5% of the export value.
The Finance Act, on the other hand, imposes a 10% tax on the value of imported kraft paper (cardboard) and containers.
Electronic Tax Invoices
This tax measure targets business owners, as they will be required to issue electronic tax invoices using the taxman’s system.
The system devised by the Kenya Revenue Authority (KRA) will also require business owners to record their inventory.
Investment allowances, interest, emoluments, imports, airline passenger tickets, and similar payments are exempt from the electronic tax.
“Where a tax law requires a taxpayer to issue an electronic tax invoice, submit a tax return in electronic form, or pay a tax electronically, and the taxpayer does not comply, the Commissioner shall issue a written notice to the taxpayer requesting the reasons for noncompliance.
“Where the reasons provided under subsection (1) do not satisfy the Commissioner, the taxpayer is subject to a penalty equal to twice the amount of tax due,” the law states.
Tax Amnesty Penalty
Those who fail to pay taxes owed as of December 31, 2022, by June 30, 2024, will incur interest penalties. Neither will amnesty be granted for the same offense.
When applying for tax amnesty, one must propose a payment plan for the delinquent amount in a letter to the KRA Commissioner.
3 Taxes & Penalties to Take Effect From September
