Kenyans will continue to bear more cost of funding government through taxation after the proposed finance bill 2020 was passed into law. income tax allowable expenses have been reduced, various supplies that were exempt from VAT are now taxable and incomes that were exempt have now become taxable.
Today we will look at various expenses that were allowable under section 15 of the income tax act that will no longer be allowable.
- Entrance fee or annual subscription paid during that year of income to trade associations.
- Capital expenditure on legal cost and other incidental expenses relating to authorization and issue of shares, debentures, and similar securities to the public.
- Capital expenditure on legal cost and other incidental expenses for the purpose of listing on any securities exchange operating in Kenya without raising additional capital.
- Capital expenditure incurred on rating for the purpose of listing on any securities exchange.
- Club subscriptions paid by the employer on behalf of the employee.
- Expenditure of a capital nature incurred on social infrastructure.
The following incomes were exempt, they will now be taxable.
- income of homeownership savings plan.
- income of NSSF.
- Monthly Annuity or pension granted to a person over 65 years old.
- Employment from employment paid in the form of bonuses, overtime, and retirement benefits to employees whose taxable employment income before bonuses and overtime allowances does not exceed the lowest tax band.
“Monthly Annuity or pension granted to a person over 65 years old.” should the government be charging retirees, especially those over 65 yrs taxes having spent their entire work life paying taxes and build the country. Those in charge of drafting finance bills should re-look this in the coming financial years.
Published By
Senior Tax Analyst/Advisor
William Kuhunya