NAIROBI, Kenya, May 30 – The Institute of Certified Public Accountants of Kenya (ICPAK) has demanded a review of a few of the Finance Bill 2024’s proposals because, if approved, they will negatively impact Kenyans.
In a statement presented before the Finance Committee during public hearings on the Finance Bill 2024, ICPAK chairman Philip Kakai beseeched MPs to pass a more reasonable bill.
He instead advised the state to seal corruption loopholes, which see the government lose billions of shillings annually.
“Over-taxation Kenyans does not lead to high revenue or even help the economy grow. The more taxes you impose the less revenue you generate,” Kakai said.
ICPAK particularly pointed out the proposed VAT on bread, motor vehicle tax, and banking and insurance services.
It said baked products globally have been on the rise, and it is even expected to grow by 13 percent by 2025 for a variety of bakes.
ICPAK said the introduction of VAT on bread will have a ripple effect on the economy.
“The Institute is of the opinion that the government should retain bread and other related wheat products as zero-rated to make them affordable to the majority of Kenyans who are still grappling with the high cost of living,” ICPAK said.
The 2024 Finance Bill has proposed the removal of ordinary bread from the list of zero-rated supplies, a VAT exemption list.
It proposed introducing a 16 percent value-added tax (VAT) on ordinary bread.
ICPAK, however, welcomed several proposals in the Finance Bill 2024, among them the introduction of a minimum top-up tax to align with the international tax regime and the revision of the Daily Subsistence Allowance (Per-diems) on approved employer policies up to a maximum of 5 percent per day of the employee’s gross monthly salary.
Also, the non-taxable benefits threshold increased to Sh48,000 per year from Sh36,000, and the meal allowance limit increased to Sh60,000 per year from Sh8,000.
ICPAK further welcomed the introduction of a significant economic presence tax at an effective tax rate of 6 percent and an increase in the pension contribution limit to Sh30,000 per month from Sh20,000.
It also welcomed the proposal to treat contributions paid for Affordable Housing Levy and SHIF as allowable deductions and not a relief and exempting transfer of business as a going concern from VAT.
The Finance Bill 2024 proposes various amendments to the Income Tax Act, the Value Added Tax Act 2013, the Tax Procedures Act 2015, the Tax Appeals Tribunal Act 2013, the Excise Duty Act 2015, and the Miscellaneous Fees and Levies Act 2016, among other Acts of Parliament.
Parliament, through the Finance and National Planning Committee, has invited the public to submit comments on the bill by May 28, 2024, before it is approved by Parliament and assented to law in June.
