How the Finance Act 2019 will affect you and your business
Exactly one week ago, President Uhuru Kenyatta signed the Finance Bill, 2019 into law.
The most talked-about aspect of the finance act 2019 has been the repeal of the interest rate capping law, which will see banks go back to set their own lending rates.
However, the Finance Act 2019 will see the introduction of a number of tax increases that are expected to raise Kenya’s cost of living to new levels.
Let’s do a recap of the key tax measures that have now come into force that will soon have a dent on you and your business.
Import Declaration Fee (IDF) has been increased from 2% to 3.5%
Railway development levy has also risen from 1.5% to 2%
Turning to motor vehicles, excise duty on petrol-engine vehicles over 3000 cc as well as diesel-engine vehicles over 2500 cc is now at 35%
Excise duty on vehicles over 1500 cc has been raised from 20% up to 25%
Excise duty has also been introduced on bottled water, non-alcoholic beverages and cosmetics with the introduction of excise stamps.
Excise duty on cigarettes and wines is up 26% while excise duty on spirits is up 44.5%
In order to encourage the manufacturing of gas cylinders locally, excise duty on imported gas cylinders has been raised to 35%.
Digital transactions will also be subject to value-added tax at the rate of 16%.
For micro, small and medium enterprises, the taxman will require you to pay a turnover tax at the rate of 3%