The Departmental Commitee on Finance and National Planning has today made its recommendations regarding the Finance Bill 2024. The committee made some notable recommendations having received feedback on the bill from the public.
Proposal to amend the Data Protection Act, is one of the features that the committee wants dropped. The Bill as is, seeks to amend section 51 of the Data Protection Act (Cap. 411C) to provide for the exemption of the processing of personal data that relates to the assessment, enforcement or collection of any tax or duty from the provisions of the Data Protection Act. This had raised privacy concerns and the parliamentary group agrees it should be dropped.
Mobile money services have also got a reprieve. While the original bill maintained the 15% excise duty on cellular networks mobile money services, it seeked to raise the excise duty on all other mobile money services to 20%. The commitee wants this proposal to be dropped completely and retain the current 15%.
“Transfer of mobile services is key to many Kenyans and therefore we have proposed that we do not have any increase on taxation on mobile phone transfer” stated MP Kuria Kimani, Molo MP and chair of the Commitee.
There is a proposed 16% introduction of Value Added Tax (VAT) on financial services and foreign exchange transactions. This was opposed by the Kenya Bankers Asociation (KBA) and the commitee has agreed it shoud be removed.
Creatives get a reprieve too, as the commitee noted that not all creative works generate income. Thus, its necessary that only those that generate income are subject to tax.
The Committee proposes a change to tax regulations concerning royalties. They argue that distributing software shouldn’t be considered a royalty-generating activity. This aligns with international best practices, where software distribution falls outside the definition of a royalty. To reflect this, the Committee recommends removing “and include distribution of the software” from the relevant clause.
Farmers Exempted From eTIMS
The Kenya Revenue Authority (KRA) has been pushing all traders and business persons to get on eTIMS. KRA set March 31st as the deadline for all businesses to onboard on eTIMS, a system that provides it with visibility of business-to-business transactions, for cross-verification of tax claims by different businesses.
However, farmers and small businesses with a turnover of below Ksh. 1 million will be exempted should the commitee’s recommendations get adopted. For the rest, KES 2 million per month penalty for not adopting eTIMs remains. KRA’s move had locked out small businesses and farmers from supplying to businesses that needed eTIMIS invoicing. The online platform has proved a business hurdle with numerous outages in recent days.
Read: Farmers Eye eTIMS Exemption After Special Committee Formed
The Parliamentary group also recommends dropping the proposal to impose Eco Levy on three-wheeler, motor cycle, bicycle and wheel chair tyres. Further, all locally manufactured products including diapers and sanitary pads will not be subject to Eco Levy. The eco levy will only be chargeable to imported finished products.
There are more recommendations beyond ICT on the finance Bill including dropping VAT on bread. The National Assembly Finance an Planning Committee’s report will be tabled this afternoon. This will give a real view of all the changes made to the finance Bill. The Bill has been scheduled for its Second Reading tomorrow,June 19th, 2024.
