Delayed Impact: 5 Taxes in Finance Act Set for 2024 Implementation
As of Monday, June 27, when President William Ruto signed the Finance Bill 2023 into law. Several taxes will be implemented for the 2023/24 Financial Year to generate revenue for his government.
The tax proposals will be implemented in stages beginning in July 2023, September 2023, and January 2024, per the Act.
In January 2024, several new taxes will take effect, including an advance tax on vans. A tax on income for non-residents, a 7.5% tax on residential rental income. Taxation on shares for employees, and taxation on income from qualifying intellectual property.
Advance Tax Payment
This tax is levied on commercial vehicles such as vans, trucks, prime movers, trailers, and tractors before issuing an operating license.
In the Finance Act, the estimated cost per tonne of load capacity per year is either Ksh2,500 or Ksh5,000, depending on which rate is greater.
This policy did not apply to tractors and trailers used for agricultural purposes.
Employee Stock Taxation
“Where an employee is offered company shares instead of cash emoluments by an eligible start-up, the taxation of the benefit from the shares allocated to that person by employment shall be deferred and taxed within thirty days of the expiry of five years from the end of the year of the award of the shares, the disposal of the shares by the employee, or the date the employee ceases to be an employee of the eligible start-up,” the Act states.
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At the commencement of implementation, the policy will not apply to any cash salaries, profits, or other in-kind benefits provided to the employee.
Income tax on non-residence
Beginning in January 2024, foreigners with business establishments in Kenya will be taxed on income sent abroad.
When calculating the tax, it is necessary to consider the net assets at the beginning of the year, the net profit for the year of calculated income, the tax payable on the chargeable income, and the net assets at the end of the year.
“The tax imposed by this section is in addition to the tax imposed on the permanent establishment’s income.”
“For this section, net assets means the total book value of assets less total liabilities for the year of income and shall not include the revaluation of assets,” reads a portion of the law.
A 7.5% increase in residential rental revenue
There will be a 7.5% tax imposed on the gross rental income collected from tenants.
The fees were reduced from 10 percent after landlords and other Kenyans protested that it would have an impact on rent prices.
Effective Date of Taxes: July 1, 2023
The taxes that will go into effect on July 1 include a 1.5% deduction for the Housing Fund. Additionally, employers will match employee contributions.
In the following month, the 16 percent Value-Added-Tax (VAT) on fuel products will also go into effect.
Delayed Impact: 5 Taxes in Finance Act Set for 2024 Implementation
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