Azimio la Umoja Analyses Finance Bill Tax Levies

The Azimio La Umoja Economic Council have criticized President Ruto’s Finance Bill tax levies. They pointed out specific clauses that touch on the proposed taxes that will be levied if the Bill passes.

Azimio la Umoja Analyse Finance Bill Tax Levies.
Photo/ Courtesy: Nderitu Muriithi

Income Tax

The chair of Azimio Economic Council Hon Nderitu Muriithi said that the Bill will increase turnover tax for businesses from one percent to three percent. Any business that sells goods worth Ksh1,370 daily must pay Ksh15,000 in tax per year. The tax is based on turnover and not on profit therefore the business owner is obligated to pay tax whether he makes profit or not.

He further said that the Bill proposes to increase tax from 30 to 35 percent for those who earn Ksh500,000 and above.

The Per diem tax which refers to travel allowances and mileage for public officers will be taxed 30 percent. This, he said, will negatively affect employees’ morale and greatly disadvantage public officers.

Withholding Tax

Hon. Nderitu said that the current level of withholding tax for professionals like engineers, architects or consultants is five percent. The Bill proposes a 15 percent tax on content creators and influencers who fall under this category. This, according to him, will discourage young people and have a negative effect on the digital economy.

Digital Asset Tax

Bitcoins and other digital currencies will be taxed at three percent whether the person makes a profit or a loss.

Read Also:Impacts of Finance Bill On the Private Sector

Marketing and Promotional Services

Those offering promotional services like deejays, MCs and other communication personnel will be taxed five percent of their total earnings.

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Advance Tax On Motor Vehicles

He added that the Bill proposes to increase Advance Tax on motor vehicles. If the Bill gets passed, a truck will be paying Ksh60,000 up from Ksh20,000 which will affect all goods on transit.

Passenger vehicles will be expected to pay Ksh5,000. Previously, the amount paid was Ksh2,400.

Capital Gains Tax

The 26th clause of the Bill proposes Capital Gains Tax on shares or interest in partnerships and trusts. If two partners bring their personal assets to the business, the value of the business will go up. If it goes up beyond 20 percent, the Bill proposes that it should get taxed.

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Value Added Tax (VAT)

The Bill proposes a VAT increase from eight percent to 16 percent, according to Hon Nderitu, if the Bill passes, transportation costs will increase affecting the price of commodities.

A 16 percent VAT on insurance compensation will also be levied. The compensation will be treated as income rather than compensation for damages.


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