National Treasury of Kenya has unveiled a comprehensive proposal aimed at enhancing tax revenue and bolstering funding for counties through the Tax Laws (Amendment) Bill 2024.
Among the key components of this legislative initiative is a notable 5% tax on interest income derived from infrastructure bonds.
This measure reflects the government’s commitment to diversifying its revenue streams while also ensuring that essential county services are adequately funded.
The proposed Tax Laws (Amendment) Bill 2024 includes several pivotal changes designed to broaden the tax base and capture a wider array of economic activities.
One of the most features of the bill is the expansion of taxation on digital services.
The proposal seeks to impose taxes on various online platforms, such as ride-hailing services, freelancing platforms, and food delivery services.
This move acknowledges the rapidly growing digital economy in Kenya and aims to ensure that digital service providers contribute to the national revenue.
In addition to the digital services tax, the National Treasury has introduced a minimum 15% tax on multinational corporations generating annual revenues exceeding Sh100 billion.
This initiative targets large global companies operating within Kenya, ensuring that they pay a fair share of taxes in relation to their significant economic activities within the country.
By focusing on larger corporations, the government hopes to enhance its tax revenue while promoting a more equitable tax system.
The Tax Procedures Amendment Bill introduces further measures to enforce compliance among tax agents.
The proposed legislation outlines penalties, including a 10% charge on tax agents who fail to remit withholding taxes as required.
This provision aims to improve accountability among tax professionals and ensure that tax collections are remitted promptly, thus safeguarding the country’s revenue stream.
Additionally, the National Treasury has proposed the Public Finance (Amendment) No. 3 Bill, which seeks to provide counties with better access to funds. The bill stipulates that counties can access up to 50% of the previous year’s funds if there are delays in passing key revenue bills.
This provision is critical in ensuring that county governments have the financial resources needed to deliver essential services, particularly during periods of fiscal uncertainty.
Another important aspect of the proposed legislation is the Public Finance (Amendment) No. 4 Bill, which aims to clarify regulations governing government borrowing and guarantees.
By establishing clear guidelines, the government seeks to enhance transparency and accountability in borrowing practices, reducing the risk of mismanagement of public funds.
These proposed legislative changes reflect the National Treasury’s proactive approach to addressing Kenya’s fiscal challenges and ensuring sustainable funding for both national and county governments.
The introduction of these tax bills has sparked discussions among various stakeholders, including businesses, tax professionals, and the general public.
While some view the measures as necessary steps toward ensuring fiscal responsibility, others express concerns about the potential burden on businesses, particularly in the digital sector, which has seen significant growth in recent years.
The National Treasury’s proposal for the Tax Laws (Amendment) Bill 2024 represents a significant step toward enhancing Kenya’s tax revenue and supporting county funding.
By implementing taxes on digital services, introducing minimum taxes on large corporations, and clarifying regulations on borrowing, the government aims to create a more equitable and sustainable financial environment.
As these proposals move through the legislative process, their implications will be closely monitored by stakeholders across the country, highlighting the ongoing dialogue around fiscal policy and economic growth in Kenya.
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