Small and medium-sized enterprises, social media influencers, gamblers, and top incomes will be among the first to be affected by the new tax laws by the Kenya Kwanza Government.
Tax Effective dates
Three dates—July 1, 2023, September 1, 2023, and January 2024—are set for the implementation of the new taxes included in the Finance Bill 2023.
However, the Kenya Kwanza administration has delayed the start of most taxes until next month in order to raise funds for the Sh3.68 trillion budget.
Gambling
For gamblers, July will also be difficult because the government wants to raise the excise tax on betting, gaming, prize competitions, and lotteries from the current 7.5 percent to 12.5 percent.
Gamblers will only be granted a reprieve in that the five percent withholding tax will now only be levied on the portion of winnings that exceeds the amount wagered, rather than the entire payout as it is now.
Advertisements, Gaming, and Media
A 5% withholding tax on the gross income obtained from the creation of digital content will also begin to be paid by social media influencers, such as those advertising businesses on their platforms.
A 15% withholding tax on fees collected for advertisements for alcoholic beverages, betting, gaming, lotteries, and prize competitions in media, including newspapers and television, would be implemented by the State in the same month.
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VAT on Petroleum
The value-added tax (VAT) on petroleum will double in July from 8% to 16%, setting a record high for the price of petrol, diesel, and kerosene at the pump.
Given that diesel and petrol represent a cost of production and transportation to the market, the planned increase in VAT on fuel will have an impact on the economy and cause the prices of items to increase.
This may prevent inflation from reaching the desired range of 2.5 percent to 7.5 percent.
High-Income Earners
If the plan to create two new tax bands with rates of 32.5 percent and 35 percent are approved by Parliament this week, high earners will likewise pay more in taxes on their gross wages starting in July.
The present tax bracket, which taxes income beyond Sh32,333 at a maximum of 30%, is what the government wants to change.
Since income beyond Sh800,000 is subject to a 35 percent tax, income between Sh500,000 and Sh800,000 will now be taxed at 32.5 percent.
Starting in July, a 1.5 percent monthly tax would be withdrawn from gross monthly pay, adding to the agony on payslips, even as the government plans to increase the national health insurance fund deduction from gross pay by 2.75 percent, rather than the present range of between Sh150 and Sh1,700.
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