The Finance Bill 2023 was recently signed into law by President William Ruto, following its successful passage through Parliament. Here is a breakdown of the key deductions and changes introduced by the Act.
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Affordable Housing Project Contribution: Starting from July 1, 2023, individuals will be required to contribute 1.5 percent of their gross salary towards the Affordable Housing Project. This deduction will appear on Kenyans' payslips and aims to generate funds for the project, which is expected to create more jobs and eventually eradicate slums in the country.
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Increased VAT on Petroleum Products: The VAT on petroleum products will double from 8 percent to 16 percent. President Ruto defended this move, stating that the additional 8 percent would raise approximately Sh50 billion, which will be used for road infrastructure development across the country.
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Reduced Tax for Digital Content Creators: Digital content creators will now pay 5 percent of their earnings as opposed to the previously proposed 15 percent. The law states that the deducted digital asset tax must be remitted to the Commissioner within 24 hours, along with the necessary payment details and information.
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Betting and Insurance Withholding Tax: Betting will now attract a 12.5 percent withholding tax, while insurance will be subject to a 16 percent withholding tax. For instance, if an individual places a bet with Sh100, Sh12.50 of their primary stake will go to the tax authorities.
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Removal of Tax on Beauty Products: The 5 percent tax previously imposed on wigs, fake beards, eyebrows, and other beauty products has been eliminated.
During the parliamentary deliberations on the Finance Bill, around 184 MPs, largely from the Kenya Kwanza party, supported the bill, while 88 MPs opposed the proposed amendments.
The Finance Act 2023 aims to generate revenue for various sectors, fund infrastructure development, and implement reforms that align with the government's objectives.