How taxes will hit Kenyans in the New Year
Kenyan businesses and consumers are staring at a fresh round of tax increases as measures approved in the 2022 Finance Act kick in this week, adding to the pain of inflation that has pushed up the cost of living to a five-year high.
The Kenya Revenue Authority (KRA) has also moved to the Supreme Court to challenge a ruling by the lower courts blocking the implementation of the mandatory one percent gross turnover minimum tax, as it lays the ground to hit the Sh2.1 trillion tax target.
Should the Supreme Court reverse the rulings by the High Court and Court of Appeal, loss-making businesses that do not pay the standard 30 percent corporate income tax will take the biggest hit.
The re-introduction of the fees on mobile-to-bank transactions and vice-versa comes with an additional tax burden of a 20 percent excise duty that will be levied on these transfers, jolting millions of Kenyans who had taken advantage of the waiver to send money cheaply.
Banks and telcos have been displaying the new lower charges relative to those applicable in the pre-Covid period excluding the excise duty that is levied on all financial transactions.
Multinational tech firms have also issued notices to customers that they will start applying the standard 16 percent Value Added Tax (VAT) on electronically supplied services such as streaming movies on Netflix or listening to music on Spotify, as the taxman sets sights on the booming digital market in Kenya.
Also read: Motivate more Kenyans to pay taxes
Other online services that will start attracting VAT include e-books and videoconferencing following the introduction of the Value Added Tax (Digital Marketplace Supply) (Amendment) Regulations, 2022.
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