2023 Ruto’s Five New Taxes For Kenyans.
In November 2022, the National Assembly approved the implementation of five new taxes, thereby expanding the tax bracket.
In the supplemental budget, the Members of Parliament increased the Personal Income Tax Rate collected from individuals and imposed on various income streams, including as wages, pensions, interest, and dividends.
“The benchmark we use refers to the Top Marginal Tax Rate for individuals. Revenues from the Personal Income Tax Rate are an important source of income for the Government of Kenya,” National Assembly Budget and Appropriations Committee statement read in part.
Capital Gains, the transfer of unquoted shares and rights, bank-to-mobile transactions, mobile-to-bank transactions, and digital content were among the taxes enacted in January 2023.
Capital gains tax on property transfers
The law defines Capital Gains Tax (CGT) as a tax imposed on the transfer of Kenya-based property acquired before to January 2015.
According to the government, the declarant and payer of Capital Gains Tax is the transferor, not necessarily the recipient.
The initial Capital Gains Tax rate was 5% of the property’s entire value, but it has subsequently been increased.
Capital Gains Tax is calculated by excluding transaction expenses from transfer value.
If the property is sold, swapped, conveyed, or otherwise disposed of in any manner (including by gift), it is still deemed taxable,” the government website noted.
Transfer of unquoted shares and associated rights
Individuals who transfer unquoted shares inside a firm must pay capital gains tax on the difference between the sale consideration received and the cost of acquisition.
Currently, Kenyans who transfer unquoted shares and rights must pay a 15% tax on the total amount.
“It is vital to ensure that the ‘Sale consideration’ he receives from the buyer is at least equal to or more than the ‘Fair Market Value’ (“FMV”), as defined by Rule 11UA of The Income Tax Rules, of the shares sought to be transferred,” a government website noted.
Mobile to Bank Transactions
Members of the National Assembly reinstated the 2018 Finance Bill, which required mobile money and internet users in Kenya to pay a 15% excise tax.
In addition, the Finance Bill mandated Kenyans to pay 20% on mobile money transfers.
Bank to Mobile Transactions
Currently, Kenyans who transfer money from banks to mobile money wallets are subject to a 20% fee on the transaction.
Tax on Digital Services
Currently, technology companies assess a 16 percent Digital Service Tax on all internet-based transactions.
The digital services include Internet-based video conferencing, music streaming, and music listening.
Article 221 of the Constitution permits the regularization of government expenditures not approved within two months after the initial withdrawal from the National Treasury.
The increased taxes will have a significant impact on the financial capacity of Kenyans, particularly those on basic salaries.
President William Ruto reaffirmed the government’s commitment to ensure that all Kenyans pay their taxes on January 4.
The head of state directed the revenue authority to increase its revenue collection by the end of the 2022–2023 financial year in order to earn at least Ksh3 trillion.
