Breakdown: 10 Tax-Free Items in 2024 Finance Bill
The Finance Bill 2024 has put forth a proposal to exempt certain key products and services from taxation, to alleviate the burden of living costs.
If approved by parliament, these proposals will establish the foundation of President William Ruto’s administration’s tax policy, intended to generate revenue for the upcoming 2024/25 financial year budget.
It’s worth noting that some items previously zero-rated in the 2023 Finance Act are now being classified as exempt. Zero-rating meant that although retail goods were not subject to taxation, suppliers could still reclaim the value-added tax (VAT) paid on inputs. In contrast, under the exemption, there is neither taxation nor the possibility of reclaiming VAT paid on inputs.
The items that were previously zero-rated but are now considered exempt include the provision of motorcycles falling under tariff heading 8711.60.00, as well as the provision of regular bread.
Furthermore, milk and cream that are not concentrated and do not contain added sugar or other sweetening substances have been reclassified from zero-rated to exempt.
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The Finance Bill also mentions that all inputs and raw materials, whether domestically produced or imported, supplied to manufacturers of agricultural pest control products upon the recommendation of the current Cabinet Secretary responsible for agriculture, will be affected by the proposal to shift products from zero-rated to exempt.
Agricultural pest control, the provision of maize (corn) flour, cassava flour, wheat or meslin flour, and maize flour with more than 10 per cent weight of cassava flour, as well as inbound international sea freight provided by a registered individual, are encompassed within this classification.
Though transitioning from zero-rated to exempt status doesn’t automatically ensure price reduction, Kenya Kwanza has suggested additional exemptions for goods previously taxed.
These items comprise micronutrient foliar feeds and bio-stimulants, packaging materials for tea, and mosquito repellents.
It’s important to mention that denatured ethanol, plain polythene film, and pressure-sensitive adhesive will lose their tax exemption status.
Furthermore, services imported or locally produced for the benefit of local film producers or agents, endorsed by the Kenya Film Commission and approved by the Cabinet Secretary for the National Treasury, will also cease to be exempted from tax.
Breakdown: 10 Tax-Free Items in 2024 Finance Bill