Sunday, May 26, 2024

Bread, boda boda, car ownership tax and other punitive taxes coming to you

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The government through the National Treasury is proposing to hit Kenyans with a series of new punitive taxes that will increase the cost of basic commodities such as bread.

Among the items set to be hit with a new series of taxes are airtime and bank transfers, including mobile money transfers.

According to the 2024 Finance Bill, the cost of bread will rise by as much as Sh. 10 for a loaf of 400 grams from the 16 per cent Value Added Tax that is set to be slapped on bread.

Also proposed is the new motor vehicle circulation tax that will see Kenyans pay as much as Sh. 100,000 to keep their vehicles on the road. The Bill states that the calculation would be based on make, model, engine capacity and year of manufacture.

An insurer of a vehicle is expected to collect and remit the motor vehicle tax within five working days after issuing an insurance cover.

An insurer who fails to collect and remit the motor vehicle tax shall be liable to pay a penalty equivalent to 50 per cent of the uncollected tax and the actual amount of the uncollected tax.

This tax will pay for each vehicle at the time the vehicle issued with an insurance cover. It will be known as the motor vehicle tax.

Kenyans whose businesses are marketed through online platforms such as Facebook’s marketplace will now start paying a tax that is to be known as digital service¬† tax.

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At the same time, global e-commerce platforms such as Amazon, AliExpress and Alibaba will pay a tax that is to be known as the Economic Significant Presence Tax. This tax will be calculated at 20 per cent of their gross turnover.

The National Treasury is also proposing to introduce what it terms as the environmental levy. This tax will be slapped on goods such as mobile phones, televisions and batteries. It will range from a low of Sh. 98 per item to a high of Sh. 1, 275.

In the same vein, the National Treasury has a bag of taxes for the boda boda sector. In the proposed 2024 Finance Bill, there is a proposed two-tier excise system for motorcycle imports. This means that individuals seeking to venture into this sector will now pay either a flat fee of Sh. 12,952 or a 10 per cent of the value of the motorcycle, whichever is higher

As a result, any import costing more than Sh. 130,000 will automatically attract higher excise compared to the present rate of Sh. 12,952 per motorcycle.

The Finance Bill, 2024 was published on May 9 and is set to be subjected to public participation

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