How the new taxes will affect your money
Proposals in the Finance Bill 2023 may leave salaried Kenyans’ payslips with more deductions.
The government has set stage for an upward review of mobile money transfer charges following a proposal to increase the excise duty on mobile money transfer fees from 12 percent to 15 percent.
The government also wants 3 percent of your basic pay to go towards the National Housing Development Fund (NHDF) with the employer matching the employee’s contribution. The contribution is expected to act as savings for employees aimed towards house ownership.
And if you are in the public service, the taxman will come after your per diem since all government employees are to pay taxes on per diem. “Any amount paid to a public officer to reimburse an expenditure incurred for the purpose of performing official duties, notwithstanding the ownership or control of any assets purchased,” the Bill states.
The Finance Bill 2023 further proposes a raft of taxes that will have a major impact on the country’s digital content creators and owners of platforms that facilitate the trading of digital assets. The proposal includes a 15 percent withholding tax on payments related to the monetisation of digital content, while marketing services will be subjected to 5 percent withholding tax. This will radically impact the youth who make their living in the digital space.
“Digital content monetisation means offering for payment entertainment, social, literal, artistic, educational or any other material electronically through any medium or channel, in any of the following forms – advertisement on websites, social media platforms or similar networks by partnering with brands including endorsements from sellers of such brands.”
The Bill has raised PAYE rates of persons earning above Ksh500,000 a month or Ksh6 million a year.
A model Pay-Slip for an employee earning a gross salary of Ksh100,000 a month.
If the bill proposals are adopted and enacted into law in the next financial year, some products like imported fish and powdered juice will attract Excise Duty. Imported fish (Ksh100,000 per metric tonne or 20 percent of the value) and powdered juice (Ksh25 per kilogramme).
Individuals who consume beauty products such as wigs, false beards, eyebrows, eyelashes, and artificial nails will have to dig deeper into their pockets as the bill proposes a 5 percent Excise Duty. Official data shows the beauty industry has grown by over Ksh10 billion over the past decade as more Kenyans embrace the use of makeup and beauty products.
And if you have ventured into cryptocurrency, the Bill now defines Bitcoin and NFTs as digital assets that will be subjected to taxes of 3 percent of the transfer or exchange value of the digital asset.
“Digital asset includes anything of value that is not tangible and cryptocurrencies, token code, number held in digital form and generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration that can be transferred, stored or exchanged electronically; and a non-fungible token or any other token of similar nature, by whatever name called,” The Finance Bill 2023 reads in part.
Bitcoin (BTC) is a cryptocurrency, a virtual currency designed to act as money and a form of payment outside the control of any one person, group, or entity, thus removing the need for third-party involvement in financial transactions. Non-fungible tokens (NFTs) are also digital tokens commonly called digital assets.
On Rental Income, a person who receives rental income on behalf of the owner of the premise shall deduct tax therefrom. And if you decide to take a KRA dispute to the Tax Appeals tribunal, you will have to make a deposit of 20 percent of the disputed tax or a security equivalent.
On a positive note, LPG and fertiliser inputs will not be taxed, and exported services will be moved from being subject to 16 percent VAT to being VAT exempt.
Betting and Gaming
There will be a daily payment of excise duty by betting companies. KRA Commissioner has been given powers to gazette daily payment of taxes for any sector. Excise duty on betting, gaming, prize competitions, and lottery (not charitable lotteries) will increase from 7.5 percent to 20 percent of the amount wagered or staked. The definition of winnings in betting has been expanded to mean the gross amount before deducting the amount staked or wagered.