In a significant win for Kenyan citizens, the government has rolled back several contentious proposals from the Finance Bill 2024 in response to widespread public outcry. Key among the withdrawn measures is the proposed 16 percent Value Added Tax (VAT) on essential goods such as bread, financial services, and foreign exchange transactions.
This decision followed a meeting of MPs from the ruling Kenya Kwanza coalition, headed by President William Ruto, at State House Nairobi. The revisions are aimed at easing the financial strain on Kenyans and stimulating economic growth.
One of the major changes includes the elimination of excise duty on vegetable oil, keeping this vital household item affordable. Additionally, the government has preserved the current status of mobile money transfer services, acknowledging their crucial role in financial transactions for many citizens.
To increase disposable income, the bill now proposes making statutory deductions like housing levies and the National Health Insurance Fund (NHIF) tax-deductible. This adjustment will reduce the amount subject to Pay As You Earn (PAYE) tax, thereby leaving more money in the hands of workers.
The revised bill also favors Small and Medium Enterprises (SMEs). The VAT registration threshold has been raised from KSh 5 million to KSh 8 million, exempting smaller businesses below this turnover from VAT registration. Moreover, businesses with an annual turnover under KSh 1 million will be exempt from the Electronic Tax Invoicing Management System (eTIMS).
To promote local production and competitiveness, the excise duty will now only apply to imported eggs, onions, and potatoes, sparing domestically produced goods.
In the education sector, the government has allocated funds to convert 46,000 Junior Secondary School (JSS) intern teachers to permanent and pensionable positions and plans to hire an additional 20,000 teachers.
The amendments to the Finance Bill 2024 reflect the government’s dedication to addressing public concerns and fostering an inclusive, supportive economic environment for all Kenyans.