Kenya’s national assembly has adopted proposed amendment to the finance bill 2020. The House has adopted the Report of the committee of the Whole house thus the bill has been adopted (with Amendments) by the National Assembly.
Expanded Landlords tax base
The new bill extends the lower and upper limit of the residential rental income tax. In this case, the amendment shifts the lower limit from KSh 144,000 to KSh288,000 with the upper limit shifting from KSh 10 million to KSh 15 million. Landlords who earn an annual rental income of between KSh 288,000 and KSh 15 million will pay tax rate of 10% of gross income.
Reprieve for Pensioners
The monthly pension granted to a person who is sixty-five years of age or more is still tax-exempt. The Bill had proposed to delete the paragraph exempting monthly pension, granted to a person who is sixty-five years of age or more, from tax. However, legislators opined that this will discourage saving into pension schemes.
READ ALSO: Pensions and Retirement Benefits under Siege in Proposed New Laws
Road Toll
This amendment inserts that a private toll collector shall only levy toll and collect monies payable on a public toll road constructed under an agreement entered into under section 4A.
The toll collector can be either private or public and enters into an agreement with the Minister or roads agency designated by the minister and approved by the National Assembly.
Consequently, this will see the establishment of Roads Maintenance Levy fund consisting of the proceeds from the levy and that from transit tolls levied on motorists.
New source of funds for KRA
KRA will have a new revenue source from agency fees paid for collecting revenue on behalf of the county government and government agency. In this case, KRA will claim 2% as commission for revenues actually collected on behalf of county governments or government agency in the previous financial year. The commission received by KRA shall not exceed two percent of the total revenue collected on behalf of the county government or government agency.
Gains on machinery
The gain accruing to a company on any transfer of machinery classified in the second schedule is not chargeable to tax.
Imports for use in special operating framework
In addition, the house resolved that the exemption of goods imported or purchased locally for the direct and exclusive use in the implementation of projects under special operating framework arrangement with the government, shall continue for existing projects for the remaining period of the agreement.
KRA Commissioner to adjust Excise duty
KRA commissioner will be making adjustments for inflation. The KRA commissioner shall with the approval of the Cabinet Secretary, adjust the specific rate of excise duty once every year to take into account in accordance with the formula specified in the First Schedule.
The notice of excise duty adjustment shall be tabled in Parliament which will consider the notice and make a resolution to either approve or reject the notice within twenty-eight days.
Excise duty on alcohol
The house adopted to reduce the thresholds for excise duty for the following categories of alcoholic drinks.
- •The reduction in alcohol strength from 10% to 6% for beer, cider, perry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic and spirituous beverages of alcohol strength not exceeding 6%
- •Spirits of undenatured ethyl alcohol, spirits liqueurs, and other spirituous beverages of alcoholic strength exceeding 8% which is a reduction from the previous ‘exceeding 10%’.
This will see Kenyans dig deeper into their pockets as the move widens the net of alcoholic beverages subject to excise duty.
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