New Tax Regulations on the Horizon: Treasury Consolidates Eight Measures into Three Bills

The National Treasury has announced plans to reinstate eight tax provisions previously removed from the rejected Finance Bill 2024.

The Treasury will consolidate these tax measures into three new bills: the Tax Laws (Amendment) Bill, 2024; the Tax Procedures (Amendment) Bill, 2024; and the Public Finance Management (Amendment) Bill, 2024.

Treasury Cabinet Secretary John Mbadi explained that these proposed amendments aim to foster sustainable growth, innovation, and long-term economic resilience. The reinstated measures include a minimum top-up tax, expanded digital marketplace regulations, pension contributions, and withholding tax on goods supplied to public entities.

Additional measures encompass an economic presence tax, taxable infrastructure bonds, mandatory KRA PINs for remote workers, and tax deductions related to affordable housing and the Social Health Insurance Fund (SHIF).

The bill intends to introduce a minimum top-up tax requiring foreign corporations with an annual turnover of Kes. 100 billion to pay a minimum tax rate of 15 percent. It will also target non-resident businesses in the online space, such as ride-hailing, food delivery, freelance, and professional services.

“This proposal seeks to expand the tax base by bringing the income of the owners of digital platforms offering these services into the tax net,” the bill states.

Additionally, the legislation proposes raising the deductible contributions to registered pension and provident funds from Kes. 240,000 to Kes. 360,000 annually, and from Kes. 20,000 to Kes. 30,000 monthly.

Under the new law, affordable housing and SHIF contributions will be tax-deductible. Furthermore, residents and non-residents delivering products to public entities will face taxes of 0.5 percent and 5 percent, respectively.

The Treasury also proposes a new five percent tax rate on infrastructure bonds, which have historically been tax-free for residents, while foreign investors will remain exempt.

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