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Kenya: Tax measures in Finance Bill 2018

Kenya: Tax measures in Finance Bill 2018

Kenya’s Finance Bill, 2018 was published, following the budget statement for financial year 2018-2019.

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Provisions of the legislation will be effective on different dates between 1 July 2018 and 1 January 2019.

The bill introduces a number of revenue-raising amendments to finance the government’s budget. Among the amendments are provisions concerning:

  • The introduction of a presumptive tax targeting the “informal sector” (this would repeal section 12C of the income tax law, that provides for a turnover tax of 3% on the gross receipts for persons with a turnover of less than KES 5 million and would replace it with a presumptive tax on persons whose turnover from business does not exceed KES 5 million per year, with the rate of tax set at 15% of the single business permit fee issued by county governments) 
  • Overhaul of the “compensating tax regime” (that is, the tax on dividends paid out of untaxed profits)
  • A tax on money transfers by banks 
  • Changes to the rates of value added tax (VAT) on certain goods and services
  • One-year extension of a tax amnesty program
  • A doubling of the late-payment interest charges 
  • Repeal of interest rate capping mechanism

 

Read a June 2018 report [PDF 1.19 MB] prepared by the KPMG member firm in Kenya

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