Nairobi — Deloitte has warned that the proposed Finance Bill 2023 will have a big impact on the country’s economy, which is slowly rebounding from the Ukraine-Russia war and coronavirus.
Deloitte East Africa Tax and Legal Leader Fredrick Omondi said that the new law, if passed, will increase the burden on taxpayers who are already suffering from high inflation.
Kenyans have been struggling to put meals on their tables amid the high prices of food commodities that have increased over the last few years.
“The Bill has a raft of tax measures that will significantly increase the burden on taxpayers both as a result of tax increases such as the higher marginal tax rate of 35% for individuals earning above KES 6 million per annum (KES 500,000 per month), the increase in turnover tax rate from the current 1% to 3% of the turnover, increased Value Added Tax (VAT) on petroleum products from the current 8% to 16%, introduction of contributions to national housing development fund, and higher excise duty rates on mobile money transactions among others,” Omondi said when the firm hosted a briefing session to analyze the Finance Bill, 2023 (“the Bill”).
On April 28, 2023, the bill was tabled in Parliament for the first reading on May 4, 2023. It proposes a raft of changes and amendments to the various tax statutes in Kenya and other laws such as the Stamp Duty Act, the Insurance Act, the Capital Markets Act, and the Unclaimed Financial Assets Act.
Others are the Statutory Instruments Act, the Betting, Lotteries, and Gaming Act, the Evidence Act, the Kenya Roads Board Act, the Road Maintenance Levy Fund Act, and the Retirement Benefits Act.
“The overall picture is one of a government keen to shore up tax revenues in the short term to make ends meet but unable to resist the temptation to continuously raid the easy targets, be it individuals in formal employment or products that are already heavily taxed like petroleum products,” Omondi added.
The Departmental Committee on Finance and National Planning has invited the public to submit comments on the bill by May 20, 2023, before it is approved by Parliament and assented to law sometime in June.
It is expected that public participation and the debate in Parliament will lead to some changes in the bill prior to its adoption into law.