April 16, 2020
2020-5586 Kenya proposes Tax Laws Amendments Bill, 2020 Executive summary Kenya’s Tax Laws Amendments Bill, 2020 (the Bill) proposes to make various changes to the prevailing tax laws in Kenya. The key tax laws that the Bill seeks to amend include: The Income Tax Act, Value-Added Tax (VAT), Excise Duty Act, Tax Procedures Act and Miscellaneous Fees and Levies Act and the Kenya Revenue Authority Act. The tax amendments proposed in the Bill are aimed at assisting taxpayers as well as the economy against the economic ramifications of the COVID-19 pandemic. This follows Presidential pronouncements issued on 25 March 2020.1 It is important to note that: - One of the key pronouncements on the reduced corporate income tax rate was excluded in the Bill. It is possible that this was an oversight.
- The reduced rate of VAT is already in effect with a legal notice issued by Government.
This Alert summarizes the main proposals included in the Bill. The proposals contained in the Bill will only take effect after going through the legislative process, with the final stage being the Presidential assent. Detailed discussion Corporate income tax Expansion of the definition of qualifying interest Qualifying interest refers to interest received by a resident individual from commercial banks or a financial institution licensed under the Banking Act, the Central Bank of Kenya (CBK) and a registered Building society. Withholding tax on qualifying interest is final. The Bill proposes to include all interest received by a resident individual under the definition of qualifying interest. This is a positive development as it will encourage investment in a number of interest-bearing portfolios. Withholding tax The Bill has proposed the imposition of withholding tax on payments made to a nonresident person on account of: - Sales, promotion, advertising and marketing services
- Transportation of goods excluding air and shipping transportation services
- Reinsurance premiums except for reinsurance premiums in respect of aircraft
The withholding tax rate applicable for sales, promotion, advertising and transportation services is 20% on the gross fees while reinsurance premiums are to be taxed at 5%. In addition, the Bill proposes an increased withholding tax rate for dividends paid to a nonresident from 10% to 15%. The aim of the aforementioned proposals is to widen the tax net by taxing income that was previously untaxed. While the measures may raise revenue for the Government in the short term, in the long run the measures could dissuade nonresident investors thereby resulting in reduced revenue for the Government. Repeal of reduced corporate income tax rates The Bill proposes repeal of reduced corporate income tax rates in relation to: - Companies whose shares are listed on the Nairobi Stock Exchange (NSE) currently subject to rates between 20% and 27%
- Companies contemplating a fresh listing on the NSE whose prescribed rate is 25%
- Companies operating a plastics recycling plant currently subject to a rate of 15%, which was introduced in 2019
The proposals to repeal the reduced tax rates may be an avenue for the Government to collect more revenue but the measures present a higher tax burden for taxpayers already facing harsh economic times. On the upside, rates applicable to companies in a special operating framework arrangement agreed between a company and the Government remain in force. Deductibility of expenses The Bill proposes elimination of specific deductible capital expenditures as outlined below: - Legal and incidental expenses incurred on authorization and issue of shares, debentures or similar securities for offer to the general public
- Legal and incidental expenses incurred for listing on any securities exchange operating in Kenya, without raising additional capital
- Expenditure incurred for purposes of listing on any securities exchange operating in Kenya
- Expenditure on the construction of a public school, hospital, road or a similar kind of social infrastructure with the prior approval of the Minister
In addition to the above capital expenditures, the Bill also proposes to exclude entrance fees or annual subscriptions paid to trade associations and club subscriptions paid by an employer on behalf of an employee as deductible expenses. The objective behind the Government’s proposal to tax expenses which were previously deductible against the background of the economic turmoil facing taxpayers due to the COVID-19 pandemic is not clear. Exempt income In a bid to increase its revenue collection, the Government has reduced the number of exempt persons and incomes as follows: Proposed deletion from exemption list | Impact | Capital gains on the transfer of: - Private residence occupied continuously by owner for a period of three years
- Land of less than KES3 million
- Agricultural land of less than 50 acres situated in an urban area
| The proposal will provide additional revenue for the Government if it is implemented. However, it may discourage people from investing through land. | Income of the National Social Security Fund (NSSF) | The NSSF is a crucial body that was established to promote savings for retirement hence taxing the income of the NSSF could have detrimental effects on retirement savings. | Investment income received by a pooled fund or a kind of investment consisting of retirement schemes | This proposal may discourage investment by retirement schemes which in turn could reduce the cashflow available to retirees. | Monthly or lumpsum granted to a person who is sixty-five years and above | This proposal will reduce the disposal income for retirees and it is not a positive proposal at a time when most people are experiencing cash shortages. | Dividends paid to a nonresident by a Special Economic Zone (SEZ) enterprise, developer or operator | This proposal will dissuade investments through the SEZs. The Government should reconsider this proposal as the SEZs were introduced with the aim of spurring investments into the country. | Interest earned from infrastructure bonds, green bonds and asset backed securities | This proposal will discourage investment through these securities if it affected. |
Capital allowances/tax depreciation The Bill has proposed abolishing the Second Schedule of the Income Tax Act (ITA) and replacing it with a new schedule. Under the new schedule: - Capital allowances will be claimed over a longer period.
- The attractive investment deduction claim of 150% of capital investment will be abolished.
The table below outlines the key highlights: Nature of asset | Current rate (%) | Proposed rate (%) | Additional comment | Hotel building | 100 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
- Hotel building is required to be licensed by the competent authority. The Bill has not however defined who is the competent authority
| Building used for manufacture | 100 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
- Building used for manufacture includes any structure or civil works deemed to be part of a building where the structure or civil works relates or contributes to the use of the building
| Hospital buildings | Not provided
for | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
- Hospital building is required to be licensed by the competent authority
| Petroleum or gas storage facilities | 100 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
| Educational buildings including student hostels | 50 | 10 | - Claimable on reducing balance
- Educational building is required to be licensed by the competent authority
| Commercial building | 25 | 10 | - Claimable on reducing balance
- Commercial building includes:
- A building used as an office, shop, showroom, godown (warehouse), storehouse, or warehouse used for storage of raw materials for manufacture of finished or semi-finished goods
- Civil works relating to water or electric power undertaking, but does not include an undertaking not carried on by way of trade
| Machinery used for manufacture | 100 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years.
- This also includes machinery used for:
- Generation, transformation and distribution of electricity
- Clean-up and disposal of effluents and other waste products
- Reduction of environmental damage
- Water supply or disposal
- Maintenance of the machinery
- Scientific research and development
Manufacture means the making, including packaging, of goods from raw or semi-finished goods, or the generation of electrical energy for supply to the national grid, or the transformation and distribution of electricity through the national grid, but does not include design, storage, transport, administration or any other ancillary activity | Hospital equipment | 12.5 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
| Ships or aircrafts | 100/ 25 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
| Motor vehicles and heavy earth moving equipment | 37.5/ 25 | 25 | - Claimable on reducing balance
- Claimable value restricted to KES3 million except for commercial vehicles which have no restriction
| Computer and peripheral computer hardware and software, calculators, copiers and duplicating machines | 30/20 | 25 | - Claimable on reducing balance
| Furniture and fittings | 12.5 | 10 | - Claimable on reducing balance
| Telecommunications Equipment | 20 | 10 | - Claimable on reducing balance
| Filming equipment by a local film producer licensed by the Cabinet Secretary responsible for filming | 100 | 25 | - Claimable on reducing balance
| Machinery used to undertake operations under a prospecting right | 100 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
- The proposed allowance of 50% needs to be aligned with the 100% currently provided for in the Ninth Schedule to avoid conflict
| Machinery used to undertake exploration operations under a mining right | 100 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
- The proposed allowance of 50% needs to be aligned with the 100% currently provided for in the Ninth Schedule to avoid conflict
| Other machinery | 12.5 | 10 | - Claimable on reducing balance
| Purchase or an acquisition of an indefeasible right to use fiber optic cable by a telecommunication operator | 5 | 10 | - Claimable on reducing balance
| Farmworks | 100 | 50 | - Residual value to be claimed at 25% on reducing balance in the subsequent years
- The Bill has however not defined farmworks and this could provide an avenue for the misinterpretation of the term by both taxpayers and Kenya Revenue Authority (KRA).
|
Employment tax Individual tax rates The individual tax rates bands have been expanded with the minimum monthly taxable income rising to KES24,OOO as follows: Current income band (annual) | Proposed income band (annual) | Applicable tax rate (%) | On the first 147,580 | On the first 288,000 | 10 | On the next 139,043 | On the next 200,000 | 15 | On the next 139,043 | On the next 200,000 | 20 | On the next 139, 403 | Income above 688,000 | 25 | Income over 564,709 | | 30 |
The Bill has also increased the individual annual tax relief from KES16,896 to KES28,800. The widened tax bands and increased relief are welcome proposals for employed taxpayers as it will translate to a higher disposable income in the wake of the COVID-19 pandemic that has resulted in cash constraints for most people. Home ownership savings plan The Bill has proposed to delete the provisions relating to the taxation of funds deposited with a registered Home Ownership Savings Plan (HOSP). The deletion of the HOSP provisions will result in: - Taxation of all funds deposited with a registered HOSP. Currently, depositors are allowed to take as an annual deduction an amount of KES96,000 deposited with a registered HOSP.
- Taxation of all the interest received from a registered HOSP. At the moment, interest of up to a maximum of KES3 million received from a registered HOSP is tax exempt.
- Taxation of the income received by a registered HOSP. The income of a registered HOSP is currently exempt.
The proposed deletions are counter-intuitive in cushioning taxpayers against the financial hardships being experienced due to the COVID-19 pandemic. Consequently, the Government should consider retaining the provisions relating to registered HOSPs in the Income Tax Act so as to avoid increasing the tax burdens for already cash strained taxpayers. Pension withdrawal tax rates The Bill has proposed the reduction of the highest tax rate on qualifying pension withdrawals from retirement funds to 25%, for amounts exceeding KES1,200,000 per annum. In addition, the Bill proposes to expand the tax bands on income withdrawals from retirement funds before the expiration of 15 years by reducing the tax rate from 30% to 25 % for withdrawals exceeding KES688,000. The above proposals will go a long way in increasing the disposable income available to retirees and a welcome measure in combating the financial hardships occasioned by the COVID-19 pandemic. Turnover tax The Bill proposes a number of changes to turnover tax as indicated below: - The annual turnover liable to turnover tax has been increased from KES5 million to KES50 million
- Turnover tax will also apply to incorporated companies. Previously turnover tax was only payable by unincorporated persons
- The turnover tax rate has been reduced from 3% to 1%
- Persons paying turnover tax will not be required to pay the 15% presumptive tax
- The penalty for late submission of a turnover tax return has been reduced from KES5,000 to KES1,000.
The above outlined proposals will help in managing the cashflow issues being experienced by taxpayers in view of the COVID-19 pandemic. Particularly, the proposal to have incorporated entities paying turnover tax is a positive development bearing in mind that the proposed turnover tax rate is 1%. Other amendments Appointment of enforcement agencies The Bill proposes to amend the Tax Procedures Act, 2015 (TPA) to empower the Commissioner to appoint a person registered under the Banking Act to act as an agent for revenue banking services through an agreement. Such a person will be required to submit the funds collected to the designated CBK account within two days. Failure to submit the funds collected within the stipulated two days will result in a penalty of 2% of the amount collected compounded daily for the period the funds are not submitted to the Central Bank. The proposal is meant to enhance the collection of revenue for the Government. Private rulings The Bill has proposed to delete the provision in the TPA requiring the Commissioner to issue a private ruling within 45 days of receiving such an application. In addition, the Bill has proposed to repeal the provisions requiring the Commissioner to publish a private ruling in at least two daily newspapers. The provision allowing any person to rely on a published private ruling has also been proposed to be deleted. The proposals give the indication that the Commissioner does not want to restrict his timeline and extent of his responsibilities. The provisions may not be received positively by taxpayers because they give the Commissioner the discretion to issue a ruling on his own time schedule. The proposals should be reviewed to include an appropriate time within which the Commissioner should respond to applications for a private ruling. Value-Added Tax (VAT) Amendment of definition of value of supply of selected petroleum products The Bill proposes to amend the definition of the value of supply of petroleum products to include excise duty, fees and other charges. The change will increase the taxable value of the products and hence the VAT amount. The proposed change will result in a price increment of petroleum products and similar price increases on downstream products and services. This proposal is counterproductive to the main objective of the Bill to cushion Kenyans against the economic effects of the COVID-19 pandemic. Additional criteria for issuance of a credit note The Bill proposes to allow businesses to issue credit notes where there is a commercial dispute in court with regard to the price payable, within 30 days after the determination of the matter. Currently, the VAT Act only allows businesses to issue credit notes within six months of the invoice date. This provision aims to provide relief to businesses in cases where the court resolution of disputes ordinarily takes longer than the prescribed period. Definition of ordinary bread The Bill proposes to amend the definition of ordinary bread to mean bread containing only the following ingredients; wheat flour, sugar, salt, yeast, fat or oil, bread improver, preservatives and water. Currently, ordinary, unleavened and gluten bread are exempt from VAT. This clarification in the definition of ordinary bread means that any other kind of bread (save for unleavened and gluten bread) made with ingredients beyond what is listed in the definition of ordinary bread will be taxed at the standard rate of 14%. Reduction in period within which to apply for VAT refunds arising from bad debts The Bill proposes to reduce the period within which businesses can apply for VAT refunds arising from bad debts from five years to four years if the debt remains unpaid for a period of three years from the date the supply was made. The proposed change will require businesses to be prompt in seeking refunds, relating to bad debts, from the KRA as the window for claim has been reduced by one year. Change to require all taxpayers to maintain records of their transactions Currently only VAT-registered persons are required to maintain records. However, with the proposed amendment, all persons doing business in Kenya will be required to maintain records of their business transactions for a period of five years and be ready to avail such records to authorized officials at all reasonable times for inspections. Amendment of status of various VAT supplies The Bill proposes to amend the VAT status of the following products from zero rate to exempt: Description | Current rate | Proposed rate | Milk and cream, not concentrated nor containing added sugar or other sweetening matter | 0% | Exempt | Vaccines for human and veterinary medicine | 0% | Exempt | Medicaments | 0% | Exempt |
The Bill proposes to amend the VAT status of the following products from zero rated to standard rated: Description | Current rate | Proposed rate | All inputs and raw materials whether produced locally or imported, supplied to manufacturers of agricultural pest control products upon recommendation by the Cabinet Secretary for the time being responsible for agriculture. | 0% | 14% | Inputs or raw materials for electric accumulators and separators including lead battery separator rolls (whether or not rectangular or square) supplied to manufacturers of automotive and solar batteries in Kenya. | 0% | 14% | Agricultural pest control products. | 0% | 14% | The supply of liquefied petroleum gas including propane. | 0% | 14% |
The Bill proposes to amend the VAT status of the following products from exempt to standard rated: Description | Proposed rate | Current rate | Plants and machinery of Chapter 84 and 85 used for the manufacture of goods | 14% | Exempt | Taxable supplies, excluding motor vehicles, imported or purchased for direct and exclusive use in the construction of a power generating plant, by a company, to supply electricity to the national grid approved by Cabinet Secretary for National Treasury upon recommendation by the Cabinet Secretary responsible for energy | 14% | Exempt | Taxable supplies, excluding motor vehicles, imported or purchased for direct and exclusive use in geothermal, oil or mining prospecting or exploration, by a company granted prospecting or exploration license in accordance with Geothermal Resources Act, production sharing contracts in accordance with the provisions of Petroleum (Exploration and Production) Act (Cap. 308) or mining license in accordance with the Mining Act (Cap. 306), upon recommendation by the Cabinet Secretary responsible for energy or the Cabinet Secretary responsible for mining, as the case may be | 14% | Exempt | Fertilizers of Chapter 31 | 14% | Exempt | Taxable supplies, procured locally or imported for the construction of liquefied petroleum gas storage facilities with a minimum capital investment of four billion shillings and a minimum storage capacity of 15,000 metric tons as approved by the Cabinet Secretary for National Treasury upon recommendation by the Cabinet Secretary responsible for liquefied petroleum gas | 14% | Exempt | Helicopters | 14% | Exempt | 8802.20.00 airplanes and other aircraft, of unladen weight not exceeding 2,000 kg | 14% | Exempt | 8803.30.00 Other parts of airplanes and helicopters | 14% | Exempt | 8805.21.00 Air combat simulators and parts thereof | 14% | Exempt | 8805.10.00 Aircraft launching gear and parts thereof; deck-arrestor or similar gear and parts thereof | 14% | Exempt | 8805.29.00 Other ground flying trainers and parts thereof | 14% | Exempt | Made-up fishing nets of man-made textile material of tariff No. 5608.11.00 | 14% | Exempt | Mosquito nets | 14% | Exempt | Materials, waste, residues and by-products, whether or not in the form of pellets, and preparations of a kind used in animal feeding | 14% | Exempt | Specialized equipment for the development and generation of solar and wind energy, including deep cycle batteries which use or store solar power upon the recommendation of the Cabinet Secretary responsible for matters relating to energy | 14% | Exempt | Tractors other than road tractors for semitrailers | 14% | Exempt | Inputs or raw materials supplied to solar equipment manufacturers for manufacture of solar equipment or deep cycle-sealed batteries which exclusively use or store solar power as approved from time to time by the Cabinet Secretary for the National Treasury, upon recommendation by the Cabinet Secretary responsible for energy and petroleum | 14% | Exempt | Aircraft tires | 14% | Exempt | Plastic bag biogas digesters | 14% | Exempt | Biogas | 14% | Exempt | Leasing of biogas producing equipment | 14% | Exempt | Parts imported or purchased locally for the assembly of computer, subject to approval by the Cabinet Secretary for the National Treasury, on recommendation by the Cabinet Secretary responsible for matters relating to information technology | 14% | Exempt | Taxable goods purchased or imported for direct and exclusive use in the construction and infrastructural works in industrial parks of one hundred acres or more including those outside special economic zones approved by the Cabinet Secretary for the National Treasury | 14% | Exempt | Inputs or raw materials locally purchased or imported by manufacturers of agricultural machinery and implements upon approval by the Cabinet Secretary responsible for industrialization | 14% | Exempt | Museum and natural history exhibits and specimens and scientific equipment for public museums | 14% | Exempt | Chemicals, reagents, films, film strips and visual aid equipment imported or purchased prior to clearance through the customs by the National Museums of Kenya | 14% | Exempt | Taxable goods for direct and exclusive use for the construction of tourism facilities, recreational parks of fifty acres or more, convention and conference facilities upon recommendation by the Cabinet Secretary responsible for matters relating to recreational parks | 14% | Exempt | Taxable goods locally purchased or imported by manufacturers or importers of clean cooking stoves for direct and exclusive use in the assembly, manufacture or repair of clean cook stoves approved by the Cabinet Secretary upon recommendation by the Cabinet Secretary for the time being responsible for matters relating to energy | 14% | Exempt | Inputs or raw materials locally purchased or imported by manufacturers of clean cook stoves approved by the Cabinet Secretary upon recommendation by the Cabinet Secretary for the time being responsible for energy | 14% | Exempt | Stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating) barbeques, braziers, gas-rings, plate warmers and similar nonelectric domestic appliances, and parts thereof, or iron or steel of tariff numbers 7321.11.00, 7321.12.00, 7321.19.00, 7321.81.00, 7321.82.00, 7321.83.00 and 7321.90.00 | 14% | Exempt | Goods falling under tariff number 4907.00.90 | 14% | Exempt | Inputs for the manufacture of pesticides upon recommendation by the Cabinet Secretary for the time being responsible for matters relating to agriculture | 14% | Exempt | The transfer of a business as a going concern by a registered person to another registered person | 14% | Exempt | Taxable goods supplied to marine fisheries and fish processors upon recommendation by the relevant state department | 14% | Exempt | Goods imported or purchased locally for direct and exclusive use in the implementation of projects under special operating framework arrangements with the Government | 14% | Exempt | One personal motor vehicle, excluding buses and minibuses of seating capacity of more than eight seats, imported by a public officer returning from a posting in a Kenyan mission abroad and another motor vehicle by his spouse and which is not exempted from VAT | 14% | Exempt | Plant, machinery and equipment used in the construction of a plastics recycling plant | 14% | Exempt | Insurance agency, insurance brokerage, securities brokerage services | 14% | Exempt | Hiring, leasing and chartering of helicopters of tariff numbers 8802.11.00 and 8802.12.00 | 14% | Exempt | Taxable services provided for direct and exclusive use in the construction and infrastructural works in industrial parks of one hundred acres or more including those outside special economic zones approved by the Cabinet Secretary for the National Treasury | 14% | Exempt | Entry fees into the national parks and national reserves | 14% | Exempt | The services of tour operators, excluding in-house supplies | 14% | Exempt | Taxable services for direct and exclusive use for the construction of tourism facilities, recreational parks of fifty acres or more, convention and conference facilities upon the recommendation by the Cabinet Secretary responsible for recreational parks | 14% | Exempt | Taxable services, procured locally or imported for the construction of liquefied petroleum gas storage facilities with a minimum capital investment of four billion shillings and a minimum storage capacity of fifteen thousand metric ton as approved by Cabinet Secretary for National Treasury upon recommendation by the Cabinet Secretary responsible for liquefied petroleum gas | 14% | Exempt | Asset transfers and other transactions related to the transfer of assets into real estate investment trusts and asset-backed securities | 14% | Exempt | Services imported or purchased locally for direct and exclusive use in the implementation of projects under special operating framework arrangements with the Government | 14% | Exempt |
Excise Duty Act Amendment of status of excise duty The Bill proposes to introduce excise duty on the following products; Description | Current rate | Proposed rate | Locally manufactured sugar confectionary of tariff heading 17.04 | Not provided for | KES20 per Kg | Locally manufactured white chocolates in blocs, slabs, or bars of tariff numbers 1806.31.00, 1806.32.00, 1806.90.00 | Not provided for | KES200 per Kg |
The Bill proposes to amend the VAT status of the following products from exempt to standard rated: Description | Current rate | Proposed rate | Goods imported or purchased locally for direct and exclusive use in the implementation of projects under special operating framework arrangements with the Government | Exempt | Taxable depending on the specific tariff | One personal motor vehicle, excluding buses and minibuses of seating capacity of more than eight seats, imported by a public officer returning from a posting in a Kenyan mission abroad and another motor vehicle by the spouse and which is not exempted from Excise Duty under the Second Schedule | Exempt | Taxable depending on the specific tariff |
Amendment of the definition of ”other fees” as per the Excise Duty Act The Bill proposes to amend the definition of ”other fees” to provide clarity interest/return on loans, insurance premium or premium based or related commissions, fees or commissions earned in respect of a loan or any share of profit or an insurance premium or premium based or related commissions specified in the Insurance Act are excluded for purposes of excise duty. The intention of the provision was to levy excise duty on fees, commissions and charges by financial institutions relating to their financial services activities to which they are licensed to perform, and not on non-financial activities. The proposed definition has provided clarity by eliminating ambiguity in the current definition. Miscellaneous fees and levies Imposition of Import Declaration Fees (IDF) The Bill proposes to amend the Miscellaneous Fees and Levies Act to introduce IDF on the following items which are currently exempt: - Gifts and donations by foreign residents to their relatives in Kenya for their personal use
- Samples which in the opinion of the Commissioner have no commercial value
- Aircraft of unladen weight not exceeding 2,000kg and Helicopters of Heading 8802.11.00 and 8802.12.00
- Raw materials for direct and exclusive use in construction by developers or investors in industrial parks of one hundred acres or more located outside the municipalities of Nairobi and Mombasa
- Goods imported for the construction of liquefied petroleum gas storage facilities
- Goods imported for implementation of projects a under special operating framework arrangements with Government
Imposition of Railway Development Levy (RDL) The Bill proposes to amend the Miscellaneous Fees and Levies Act to introduce RDL on the following items which are currently exempt: - Raw materials for direct and exclusive use in construction by developers or investors in industrial parks of one hundred acres or more located outside the municipalities of Nairobi and Mombasa and goods imported for the construction of liquefied petroleum gas storage facilities
- Goods imported for implementation of projects under special operating framework arrangements with the Government
Power to exempt goods from levies The Bill proposes to grant the Treasury Cabinet Secretary sole discretion to issue exemptions from IDF RDL. Currently, the Miscellaneous Fees and Levies Act provides for exemptions from IDF and RDL where the goods imported are for promotion of investments in Kenya, and whose value are not less than KES200 million. The projects also need to satisfy the public interest criteria. Introduction of ”processing fees” on duty free motor vehicles The Bill proposed the introduction of processing fees of KES10,000 on all motor vehicles excluding motorcycles imported or purchased duty free prior to clearance through customs under the Fifth Schedule to the East African Community Customs Management Act, 2004. Introduction of processing fees on duty free items is intended to be a revenue raising measure. The proposal retracts the initial exemption of the motor vehicle from duty by imposing a processing fee of equivalent effect. Endnote - See EY Global Tax Alert, Kenyan Government introduces tax measures in response to COVID-19, dated 26 March 2020.
_____________________________________________________________________ For additional information with respect to this Alert, please contact the following: ATTACHMENT 
|
