NOVEMBER 2024 – KENYA
THE TAX LAWS (AMENDMENT) BILL, 2024
It is important that employers note the following:
New tax measures proposed in the Tax Laws (Amendment) Bill, 2024
Kenya Gazette Supplement No. 192 was introduced to the National Assembly on 4 November 2024 and had its first reading on 13 November 2024. The bill aims to reinstate some of the tax provisions initially included in the Finance Bill, 2024 which was later retracted by President Ruto after protests that led to fatalities. The key proposed amendments in the bill are:
- The exempt limit for non-cash benefits increases from KES 36,000 to KES 60,000 per annum.
- The non-taxable meals threshold increases from KES 48,000 to KES 60,000 per annum.
- The non-taxable amount for gratuity and similar payments increases from KES 240,000 to KES 360,000 per annum.
- The bill seeks to repeal affordable housing relief. Contributions to the Affordable Housing Fund, Social Health Insurance Fund and Post-Retirement Medical Fund are proposed to be deductible in determining an individual’s taxable income. To prevent double benefits, the associated reliefs are being removed accordingly.
- Introduction of tax deductions for contributions to the following:
- Affordable Housing Levy
- Post-Retirement Medical Fund (relief capped at KES 15,000 per month)
- Social Health Insurance Fund
- Raising the tax deduction limit for mortgage interest from KES 300,000 to KES 360,000 per annum.
- Increasing the tax deduction limit for contributions to registered pension or provident funds, individual retirement funds and public pension schemes from KES 240,000 to KES 360,000 per annum.
- Raising the exempt portion of employer contributions to retirement funds for non-taxable employers from KES 20,000 to KES 30,000 per month.
- Expanding exempt income categories to include pension payments, gratuities and other payments from registered pension/provident funds, public pension schemes or the National Social Security Fund, subject to specific rules and conditions.
In addition, the Tax Procedures (Amendment) (No. 2) Bill, 2024 had its first reading in the National Assembly. Of particular relevance to employers is the following:
- The bill proposes granting the Commissioner authority to issue notices to businesses with an annual turnover exceeding KES 5 million. These notices would require such businesses to integrate their electronic tax systems with the Kenya Revenue Authority (KRA) system, enabling the submission of electronic documents and detailed transaction data. The notice period can be extended for up to one year, and non-compliance may attract a penalty of up to KES 500,000 per month.
- The bill aims to target employees working remotely outside Kenya for Kenyan employers by requiring them to register for tax in Kenya and pay taxes locally. This initiative is part of Kenya’s strategy to ensure that all employment income sourced from Kenya is subject to taxation within the country.
The provisions of the bills will take effect on either the date the President grants assent or the date specified in the bill for its operation, whichever occurs later.
The National Assembly has scheduled public participation sessions on 22 and 23 November 2024, inviting members of the public to share their feedback on the proposed bills. CRS will keep an eye on these developments and provide you with updates.
To view the Tax Laws (Amendment) Bill, 2024, follow the link.
To view the Tax Procedures (Amendment) (No. 2) Bill, 2024, follow the link.
