KENYA FINANCE BILL 2024: Taxes are coming, Are you ready

Brace yourselves, Kenyans major changes are on the horizon with the introduction of
the Finance Bill 2024. Unveiled to the National Assembly in May, this bill is poised to
overhaul the tax landscape, affecting everything from digital services to motor vehicle
ownership. With proposals that include a new motor vehicle tax, a significant economic
presence tax, and increased excise duties on financial services, the bill aims to bolster
government revenues but has already sparked heated debate. Is this a bold step toward
economic stability, or a burden too heavy for businesses and citizens to bear? Dive in
as we dissect the key components of this controversial bill and explore its potential
impact on Kenya’s economic future.
The Kenya Finance Bill 2024 proposes a series of significant changes aimed at
increasing government revenue and addressing various economic challenges , hence
the theme “ Sustaining Bottom-up Economic Livelihoods “

Some of the key highlights of the Bill include; Digital and Economic Presence Taxes:
The bill seeks to replace the Digital Service Tax with a Significant Economic Presence
Tax, targeting non-resident digital businesses with a 30% tax on deemed taxable profits
derived from services in Kenya. Additionally, a digital content tax of 20% for nonresidents and 5% for residents is proposed, impacting digital marketplaces and content
creators (Bowman’s Law) (Kenya Insights).

Motor Vehicle Tax: A new tax of 2.5% of the vehicle’s value, capped between KES
5,000 and KES 100,000, will be levied on motor vehicles at the time of insurance cover
acquisition. Exemptions apply to ambulances, government, and diplomatic vehicles
(Kenyans)

Minimum Top-up Tax: Multinational corporations with consolidated turnovers
exceeding EUR 750 million will face a minimum tax of 15% if their effective tax rate falls
below this threshold (Bowman’s Law) (Kenyans)

Value Added Tax (VAT) Changes: The VAT registration threshold is set to increase
from KES 5 million to KES 8 million. Several financial services and goods in the tourism
and manufacturing sectors will lose their VAT exemptions, now subject to the standard
16% rate (Bowman’s Law) (Grant Thornton Kenya).