Finance Bill, 2023: An analysis of the major tax proposals

The long-awaited Finance Bill, 2023 (Bill) was finally tabled before the National Assembly on 4 May 2023. The Bill comes after a lot of speculation by taxpayers, lobbying by business associations, and speeches or promises from government officials.


We detailed the expectations that taxpayers had in our article here. Some of the proposals that we were expecting made it to the Bill including Value Added Tax (VAT) exemption for liquified petroleum gas, VAT exemption for exported services, shortened time for processing tax refunds, introduction of excise duty on imported fish and furniture and an amnesty program to encourage taxpayers to self-disclose their tax liabilities, settle them and in return enjoy an exemption of penalties and interest. 


Our Firm participated in the Finance Bill 2023 process by forwarding proposals to the National Treasury. Among the many proposals that made it to the Bill, we single out the inclusion of the tax amnesty program which was a unique proposal from our Firm. The proposal, if finally adopted in the Finance Act 2023, will be an extension of the success of the ongoing Voluntary Tax Disclosure Program (VTDP). Cumulatively, over 19,021 taxpayers enrolled for the VTDP with an estimated revenue collection of Kes 10.367 Billion. As at March 2023, the Kenya Revenue Authority (KRA) had collected Kes 9.329 billion.


The Finance Bill 2023 comes at time when KRA is keen to collect tax within 24 hours if not in real time. There are a couple of amendments in the Bill which will facilitate this such as the codification of electronic tax invoice management system and the requirement to account for Withholding Tax within 24 hours.


We have a few surprises in the Bill including the proposal to tax digital assets such as cryptocurrencies. The proposal for 35% tax on employees earning more than Kes 500,000 per month and the proposal to deposit 20% of the disputed tax with KRA before appeal to the High Court, is debatable but not a surprise.


The Finance Bill will in the next few days be subjected to public participation. We continue to encourage everyone to participate by providing comments to the National Assembly when the time comes. Otherwise, we shall have some provisions in the Finance Act taking effect from 1 July 2023, others from September 2023 and the rest from January 2024.


Click here for our detailed analysis of the proposals in Finance Bill, 2023.




Read the original publication at Cliffe Dekker Hofmeyr.

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