Summary

The Finance Bill 2024 in Kenya proposes several amendments to tax laws. Key highlights include an expanded definition of digital content monetization, an updated definition of a “related person,” a new definition of “royalty” to include software payments, and the removal of the pension fund registration requirement. The bill also introduces a new definition of “donation,” reduces the period for claiming deferred foreign exchange losses, expands taxable services offered through a digital marketplace, taxes income from the supply of goods to public entities, and makes changes to tax-free thresholds and non-taxable limits for retirement schemes. The bill aims to broaden the tax base, clarify tax definitions, and introduce new tax measures to generate additional revenue for the government. The proposed amendments have implications for investment in infrastructure and green bonds, retirement savings, taxation of non-residents, VAT compliance, and various sectors such as film production and tourism.

Key Insights

• The Finance Bill 2024 proposes several amendments to tax laws in Kenya.
• The bill aims to broaden the tax base, clarify tax definitions, and generate additional revenue for the government.
• Key highlights include changes to the definition of digital content monetization, related person, royalty, and donation.
• The bill also proposes amendments related to pension benefits, taxation of non-residents, withholding tax, and Value Added Tax (VAT) regime.
• The proposed amendments have implications for investment in infrastructure and green bonds, retirement savings, taxation of non-residents, VAT compliance, and various sectors such as film production and tourism.

Frequently Asked Questions

What are the key highlights of the Finance Bill 2024?

Some key highlights of the Finance Bill 2024 include an expanded definition of digital content monetization, updated definition of a “related person,” new definition of “royalty” to include software payments, removal of the pension fund registration requirement, introduction of a new definition of “donation,” reduction in the period for claiming deferred foreign exchange losses, expansion of taxable services offered through a digital marketplace, taxation of income from the supply of goods to public entities, changes to tax-free thresholds for per diems and non-cash benefits, and increase in non-taxable limit for contributions to retirement schemes.

What are the implications of the proposed amendments in the Finance Bill 2024?

The proposed amendments in the Finance Bill 2024 have implications for investment in infrastructure and green bonds, retirement savings, taxation of non-residents, VAT compliance and costs, and various sectors such as film production and tourism. The elimination of exemption for interest income from infrastructure bonds and green bonds may discourage investments in these securities. Taxation of interest income from these bonds for residents may discourage resident investors. Changes to pension benefits, taxation of non-residents, and withholding tax will impact individuals and businesses. Amendments to the VAT regime will affect compliance and costs, especially for certain financial services, insurance services, and goods and services used by local film producers and bread producers.

What are the proposed changes to the VAT regime in the Finance Bill 2024?

The proposed changes to the VAT regime in the Finance Bill 2024 include increasing the VAT registration threshold from KES 5 million to KES 8 million, subjecting certain financial services and insurance services to VAT, changing the VAT treatment of goods and services used by local film producers, bread, and certain materials. The bill also proposes introducing a definition of “tax invoice” and changing the time of supply for exported goods.

How will the proposed amendments in the Finance Bill 2024 impact retirement savings?

The proposed amendments in the Finance Bill 2024 include an increase in the non-taxable limit for contributions paid into registered retirement schemes. This will incentivize individuals to contribute more to their retirement funds. However, changes to tax-free thresholds for per diems and non-cash benefits may impact the overall tax treatment of retirement savings.

What are the implications of the proposed changes in the Finance Bill 2024 for the taxation of non-residents?

The proposed changes in the Finance Bill 2024 include an expanded definition of digital content monetization and taxation of income from the supply of goods to public entities for non-residents. Additionally, the bill proposes charging excise duty on excisable services offered in Kenya by non-residents through a digital platform. These changes will impact the taxation of income generated by non-residents in Kenya.