New taxes that you will be paying this year
The Kenya Revenue Authority is looking to collect more taxes after the 2022 Finance Act took effect on the New Year.
Just weeks after new tax measures in the approved 2022 Finance Act took effect on January 1, consumers are already feeling the pinch, crying foul, and are staring at another fresh round of tax increases in coming months, as the government goes big on tax collection to reduce external borrowing.
Tax changes in 2023
A 20 percent excise duty on bank to mobile wallet transactions and vice versa has been reintroduced. The reintroduction of these charges is likely to hit consumers hard who had been cushioned by the waiver as one of the mitigating mechanisms against the effects of the Covid-19 pandemic.
The Kenya Revenue Authority (KRA) Commissioner General is also now empowered to exempt specified goods from the Excise Duty Inflationary Adjustment after considering prevailing economic conditions.
Similarly, The National Treasury is proposing to raise the price of Excise Duty stamps by up to four times if approved. An Excise Duty stamp is a type of revenue stamp affixed to some excisable goods to indicate that the required excise has been paid by the manufacturer. In such a situation in most cases, the added cost is passed on to consumers.
This will raise stamp fees for cosmetics from 60 cents per stamp to KShs2.50 – a margin of 317 percent, while the stamp fee for fruit juices and non-alcoholic beverages such as sodas will go up by 267 percent to KShs2.20 from 60 cents.
The cost of a stamp affixed on a beer bottle will double to KShs3 from KShs1.50, while those for spirits, wines and tobacco products are set for a 79 percent rise to KShs5 from the current KShs2.80 per stamp.
Capital Gains Tax
Capital Gains Tax (CGT) on the transfer of property, unquoted securities and rights has been tripled to 15 percent. However, it’s worth noting that CGT on transfer by a company certified by the Financial Center Authority with an investment of KSh5 billion is set to remain flat at 5 percent.
The CGT is the levy investors pay on the profits or gains made when one sells, gives away or disposes of an asset, such as shares or properties like homes and land.
Corporate Income Tax
For companies operating shipping businesses and those in the carbon market in Kenya will pay 15 percent tax from 30 percent.
Value Added Tax (VAT)
Value Added Tax (VAT) on services supplied online including E-books, video conferencing, movies, and music has been set at 16 percent. Already, some multinationals like Google and QuickBooks have already issued notices to that effect.
The Withholding Tax on derivatives earnings by foreigners has been set at 15 percent, while that on interest earnings on bearer bonds issued to non-residents is 7.5 percent.
KRA’s Minimum Tax Push
The Kenya Revenue Authority (KRA) is set to move to the Supreme Court to challenge the decision by the Court of Appeal that upheld the High Court’s decision to quash the introduction of the Minimum Tax which would see all companies – even loss-making ones, pay a 1 percent tax on gross annual sales.