Ruto makes backtracks on major tax proposals

By Moses Muli

Published: June 18,2024 12:25 PM

The Kenyan Government has dropped major tax proposals that have attracted uproar among Kenyans in recent weeks.

The announcement came after President William Ruto hosted a parliamentary group meeting at State House, Nairobi, on Tuesday.

In a press briefing after the PG meeting, the Ruto team said the proposals were dropped following a public participation exercise that saw Kenyans raise opposition against them.

“The exercise we did on public participation was not an exercise in futility,” National Assembly Finance Committee Chair Kuria Kimani said.

“We have agreed that we must protect Kenyans from increased cost of living.”

Among those dropped are a tax on bread, motor vehicle and eco-tax.

Excise duty on vegetable oil has also been removed.

The tax imposed on transfer of mobile service has been retained at 15 per cent that was existing earlier.

The tax imposed on locally manufactured diapers and sanitary pads has also been dropped.

“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 said.

The threshold for VAT registration has been increased from Sh5 million to Sh8 million.

This therefore means that many small businesses will no longer need 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 said.

Excise duty has however been imposed on imported table eggs, onions and potatoes to protect local farmers.

Excise duty on alcoholic beverages will now be taxed on the basis of alcohol content and not volume.

The higher the alcohol content the more excise duty it will attract. Consequently, alcohol manufacturers are expected to make safer and cheaper alcohol.

Pension contributions exemption will increase from Sh. 20,000 per month to Sh. 30,000.