In a surprising reversal, the government has announced the removal of several contentious tax proposals that had sparked widespread public outcry. This decision comes after intense lobbying from various sectors and a series of nationwide protests.
One of the most significant changes is the removal of the proposed 16% Value Added Tax (VAT) on bread. This tax had been widely criticised for its potential impact on the cost of living, especially for low-income households. Similarly, the excise duty on vegetable oil has also been eliminated, which is expected to provide some relief to consumers.
In another positive move, the VAT on the transportation of sugar has been removed. This decision is likely to benefit both consumers and the sugar industry, which has been struggling with high transportation costs.
The government has also decided to abolish the 2.5% Motor Vehicle Tax, which had been a point of contention for car owners and the automotive industry. Additionally, the Eco Levy on locally manufactured products has been removed, which should help boost local manufacturing and reduce the cost of locally produced goods.
Farmers and small businesses with a turnover of below Ksh.1 million will no longer be required to use electronic tax invoice management systems (eTims), which had been a significant burden for many. This measure is expected to simplify tax compliance for small enterprises and help them grow.
In a bid to protect local farmers, the government has imposed excise duty on imported table eggs, onions, and potatoes. This move aims to make local produce more competitive and support the agricultural sector.
Contrary to previous proposals, there will be no increase in taxes on mobile money transfers. This will be a relief to many who rely on mobile banking for their financial transactions.
The government has also decided to remove VAT on financial services and foreign exchange transactions, which should reduce the cost of banking and foreign exchange services.
Moreover, the threshold for VAT registration has been increased from KSh 5 million to KSh 8 million. This change means that many small businesses will no longer need to register for VAT, easing their administrative burden and allowing them to focus on growth.
These changes mark a significant shift in the government’s tax policy and reflect a response to the concerns of various stakeholders. The new measures are expected to provide much-needed relief to consumers, small businesses, and the agricultural sector, fostering a more supportive economic environment.
