The Finance Bill 2023, which has been plagued by stiff opposition from a section of legislators and civil societies as well as professional bodies, has finally received assent from Kenya’s President Dr William Ruto.
President Dr William Ruto also penned his signature on the Appropriations Bill 2023-which allows the state to withdraw cash from the Consolidated Fund, to be used for Government spending.
The coming into law of the Finance Bill now gives life to the various revenue-raising measures that the first Kenya Kwanza administration had proposed to finance the 2023/24 National Budget.
Finance Bill becomes law before the 2022/23 financial year ends this month
The signing of this crucial piece of legislation comes towards the tail end of the 2022/23 financial year, which comes to a close on Firday 30th June 2023.
Key among the tax measures expected to hit the pockets of Kenyan consumers is the hike in value-added tax (VAT) on petroleum products from 8% to 16%.
Digital content creators will also have to begin paying a 1.5% tax down from the earlier proposed 15% tax, a measure that is expected to increase the cost of doing business for players in the nascent digital content space.
Other painful tax measures contained in the finance bill 2023 include a new tax band for high-income earners as well as taxation of earnings from the betting and lottery business as well as advertisers of alcoholic beverages, a cost that is likely to be passed on to consumers.
Individuals with earnings between KSh 500,000-800,000, will now move up the tax net and pay income tax at the rate of 32.5% and those earning over KSh 800,000 per month to pay income tax at the rate of 35%. The move by the Treasury CS to introduce two new bands is to ensure equity by allowing high networth individuals to bring in their fair share of tax contributions.
The most contentious tax measure in the 2023 finance bill remains the 1.5% Housing Tax on the Gross Pay of all employed Kenyans. Questions still remain on why the decision to raise cash for the construction of affordable housing was arrived upon before all the necessary legislation was first put in place to ringfence and safeguard the housing fund from any misappropriations.
It is still also unclear whether the signing of the Finance Bill 2023 will not attract contempt of court proceedings, given that there are several petitions in court against the Bill, that is now law.