The 2024 Finance Bill has raised a storm by proposing a series of controversial taxes that have left Kenyans puzzled. Among the proposed taxes is a new 16% VAT on cheque processing and forex transactions.
In the proposed bill, the National Treasury amended the list of services and products that were exempted from value added tax. This has now seen the inclusion of foreign exchange transactions. These transactions including the supply of foreign drafts and international money orders, and cheque handling – processing, clearing, and settlement.
Other financial services targeted for VAT include the issuance of securities for money, including bills of exchange, promissory notes, money, and postal orders.
Apart from cheques and forex, the 2024 Finance Bill is also seeking to increase the cost of bread will rise by as much as Sh. 10 for a loaf of 400 grams by including a 16% VAT 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.
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.
Bread, boda boda, car ownership tax and other punitive taxes coming to you
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.
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.
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.