Wednesday, November 6, 2024 – The Government of President William Ruto has
moved to make doing business in Kenya more difficult.
This is after Treasury Cabinet
Secretary John Mbadi imposed hefty penalties and more tax deductions on
employers in the proposed tax bills.
In one such bill, even
though the Finance Act 2023 amendment had made the withholding
tax collections due within five working days without any defined penalties,
the new proposal seeks to take away this relief.
If the new amendment bill
passes, employers and individuals who remit withholding tax will be charged a
hefty amount for failing to adhere to this time limit.
In the Finance Bill 2024, the
government also sought to introduce a withholding tax on goods supplied to
public entities at a three per cent rate for residents and five per cent for
non-residents.
Withholding tax is a type of
income tax paid to the government by the payer of the income or the employer
rather than by the recipient of the income or the employee.
It is deducted at the source and
charged to the employer instead of from the employee and is significantly lower
than the Pay-As-You-Earn (PAYE) Tax.
Another proposal in the bill
that has been basically plucked from the Finance Bill 2024 and could highly
impact what employers remit to their employees is the one proposing an increase
in the monthly deductible for pension contributions.
If this is enacted, it could
transition the pension sector from Exempt-Exempt-Exempt to Exempt-Exempt-Tax
increasing the contributions from Ksh20,000 to Ksh30,000.
The Kenyan DAILY POST
