Nairobi — Audit firm PricewaterhouseCoopers (PwC) has warned Kenyans of the potential impacts of new tax laws proposed in the Tax Laws (Amendment) Bill, 2024 and the Tax Procedures (Amendment) Bill, 2024.
The Bills which were presented at the National Assembly by the Cabinet Secretary for the National Treasury and Economic Planning seek to revise various tax laws, including the Income Tax Act, Value Added Tax Act, Excise Duty Act, Tax Procedures Act, and the Miscellaneous Fees and Levies Act.
"PwC have just issued a Tax Alert which provides an in-depth analysis of the proposed amendments in the Tax Laws (Amendment) Bill, 2024, and the Tax Procedures (Amendment) (No. 2) Bill, 2024 (the "Bills"), presented to Kenya's National Assembly on 4 November 2024," PwC stated.
The Bills proposes the introduction of new employment tax reliefs ranging from increase in the tax-free thresholds to tax reliefs for contributions to the new Social Health Insurance Fund and Affordable Housing Levy.
Other key amendments proposed in the Bills include the imposition of withholding tax on goods supplied to public entities, and digital services tax which will impact digital platforms.
PwC noted that the introduction of a tax on goods within the Income Tax Act is a trend of shifting the focus of the Income Tax Act from the taxation of income to a turnover tax system.
"Another amendment to the digital services tax which is now replaced with the significant economic presence tax. This is the fifth proposed amendment that has been introduced in respect of the digital services tax in the last four years demonstrating the uncertainty of tax policy around digital platforms," the firm stated.
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PwC said that the Tax Procedures (Amendment) Bill, 2024 also seeks to increase the Commissioners powers constraining taxpayer's rights under the Tax Procedures Act.
According to the firm the amendments intend to integrate taxpayer's systems with the Commissioners which may intrude on taxpayer's privacy.
In July 2024 the government was forced to reorganize the budget following the withdrawal of the Finance Bill 2024, which sparked protests across the country.
President William Ruto had expressed regret that the withdrawal of the Finance Bill 2024 will force the government to borrow an additional Sh1 trillion for the Financial Year 2024/2025.
The controversial Finance Bill, which was seeking to raise more revenue for the state was withdrawn by the President in response to mounting pressure after weeks of protests.
"I have been working to remove Kenya from a debt trap but unfortunately that is not going to happen any time soon," Ruto lamented during a joint media interview emphasizing the dire consequences this would have on Kenya's already strained debt situation.
