Kenyan Govt to Introduce Withholding Tax on Produce Sold to Cooperatives
The National Treasury, representing the Government, has announced plans to impose taxes on agricultural goods sold by farmers via different cooperative channels.
The Treasury’s Draft 2024 Budget Policy Statement highlighted that this action would assist the government in generating income to support and maintain the Bottom Up Economic Transformation Agenda.
The agricultural industry was identified as a challenging sector to tax, and the Treasury committed to creating a structure to generate income from this field.
“(The Treasury will) Review and explore means of suitable taxation of the agriculture sector, such as introducing withholding tax on payments for produce delivered to cooperatives or other organized groups,” the Policy Statement indicated how farmers would be affected in the 2024/2025 Financial Year Budget.
As per the Kenya Revenue Authority, withholding tax is a means of collecting taxes where the entity paying specific incomes deducts the tax before making payments to the recipients of those incomes.
The entity making the deduction must promptly send the deducted tax to the Commissioner of the Domestic Taxes Department within 5 working days following the deduction.
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The ministry led by Njuguna Ndung’u promised Kenyans that they would implement a limit to support those with lower incomes.
Other hard-to-tax sectors include informal and digital sectors.
To secure revenue from these areas under the Kenya Kwanza administration, the policy statement suggests examining and considering appropriate tax methods for both the informal and digital sectors.
The Treasury plans to generate more income through the implementation of a carbon tax and providing financial incentives to promote environmentally-friendly initiatives.
Furthermore, President William Ruto’s administration plans to implement a tax on the circulation of motor vehicles.
Each year, motor vehicle owners will need to make payments, although some categories of motor vehicles will be exempt from this requirement.
Kenyan Govt to Introduce Withholding Tax on Produce Sold to Cooperatives
