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
There will be more tax burden for Kenyans after finance bill 2020 was passed in parliament. The bill proposes several changes to the tax act. We shall discuss the changes that have been made to the income tax act, vat act of 2013, and excise act of 2015 in detail in due course. The introduction of Minimum Tax, TOT, DST, lowering the tax bracket for income tax, exemptions in the income tax will now be taxable, exemptions in the VAT act of 2013 will now be taxable and some of the ZERO RATED supplies will be subject to a higher tax rate. This means that Kenyans will have to dig deeper in their pockets to sustain the taxes imposed.
In case of any questions and clarifications call us or visit our offices. Don’t get caught unawares, failure to file taxes collectly and on time attracts a penalty.
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