Finance Bill 2024: Ruto Reverses Major Tax Proposals

The Kenya Kwanza Government has withdrawn major tax proposals that recently sparked public outrage. This decision was announced after President William Ruto held a parliamentary group meeting at State House, Nairobi, on Tuesday. In a subsequent press briefing, the Ruto team stated that the proposals were dropped in response to public opposition during a participation exercise.

“The exercise we did on public participation was not an exercise in futility," said National Assembly Finance Committee Chair Kuria Kimani. "We have agreed that we must protect Kenyans from increased cost of living."

The government has dropped proposed taxes on bread, motor vehicles, eco-tax, vegetable oil, locally manufactured diapers, and sanitary pads. However, the excise duty on mobile service transfers remains at the existing 15 percent.

"It is crucial to point out that Eco Levy is being levied on imported finished products. Locally manufactured products will, therefore, not attract the Eco Levy. Locally assembly and manufacturing will help boost Kenya's manufacturing capacity, create jobs and save foreign exchange," Kuria stated further. 

The VAT registration threshold has been raised from Sh5 million to Sh8 million, exempting many small businesses from the requirement to register for VAT.

"Responsibility for electronic invoicing ETIMS, recently introduced by KRA, has been receded from farmers and small businesses with a turnover of below Sh. 1 million," Kuria stated. He also mentioned that concerns were raised about avocado farmers being required to issue eTims receipts. “We have proposed that farmers and businesses with annual turnover of less that Sh1 million a year be exempted from eTims registration,” Kuria said.

The electronic Tax Invoice Management System (eTIMS) is a software for tax invoicing. Excise duty has been introduced on imported table eggs, onions, and potatoes to protect local farmers. Excise duty on alcoholic beverages will now be based on alcohol content rather than volume, encouraging safer and cheaper alcohol production. The exemption for pension contributions will increase from Sh20,000 to Sh30,000 per month.

The Bill entered the most crucial stage today. 


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