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Kenya Budget 2024

Finance Bill 2024 enters the crucial stage following active public participation

by Fredrick Kimotho

Monday, 10 June 2024 marked the end of public participation on the tax proposals made in the Finance Bill 2024 (“the Bill”). Like last year, the stakeholders came forward in large numbers to make oral submissions on various clauses of the Bill with a clarion call to have some of the clauses amended or dropped, prior to passing of the Bill. This year, in addition to the usual oral submissions by stakeholders who would ordinarily have submitted written submissions, the departmental committee on Finance and National Planning (“the Committee”) set aside one day for what was dubbed as public hearing. This was reserved for any member of the public to share their views and proposals with the committee. 

This year’s Bill seeks to raise additional revenue of KES 302 billion, the largest amount of additional revenue in the history of Kenya’s Finance Bills. This represents a 43% increase, compared to Finance Bill 2023, which sought to raise an additional KES 211 billion. Notably, the revenue target for Finance Bills since 2019 was in the range of KES 35 billion to KES 50 billion. Because of the significant increase, the Finance Bill, 2024, similar to Finance Act 2023, has explored several unfamiliar territories in a bid to achieve the proposed target. It is, therefore, not a surprise that last year’s Bill and the current one have attracted a lot of debate from all quotas including the common mwananchi

Key considerations as the Bill enters the crucial stage: As the National Assembly debates the Bill prior to assent, it is prudent for the lawmakers to consider the wider impact of the proposals on the economy at large. In this article, I highlight some considerations the lawmakers should take into account.  

Some of the proposed measures are likely to cause more harm than good: While some of the proposals may yield tax revenue in the short run, they are likely to cause more harm than good in the medium to long term. Among these measures are; the proposed introduction of motor vehicle tax, introduction of eco levy, introduction of VAT on selected financial services. The  motor vehicle tax, for instance, is likely to have a negative impact on several fronts. The insurance sector will certainly bear the greatest burden due to its central role in the implementation of the tax and the expected reaction of policyholders who may downgrade to third party insurance or even opt out if they are unable to afford the additional charge on top of the insurance premium. This may negatively impact the perfomance of insurance business and consequently tax collections. Additionally, its short-term benefits are likely to outweigh the long-term multiplier effects. Taking into account the significant taxes already paid by motor vehicle users in the form of taxes on vehicle purchases as well as high fuel taxes and levies, the National Assembly should consider dropping this proposal prior to passing the Bill.

Revisit prior years’ changes and take remedial measures: The Bill presents the National Assembly with the opportunity to relook at some of the tax provisions that were enacted last year, which have had negative consequences for businesses and make the requisite changes this year. Some of the key changes that need to be revised include the restriction on deductibility of invoices that are not e-TIMs compliant, abolition of waiver of penalties and interest and the end date of the tax amnesty. If the provision that requires taxpayers to only take a deduction of expenses that are supported by eTIMs compliant invoices is not deferred, it is likely to lead to forfeiture of genuine expenses incurred by many taxpayers – not because the taxpayers are not compliant but because the implementation window for e-TIMS has been extremely short for the Kenya Revenue Authority (KRA) and for businesses at large. Indeed, as at the time of writing this, there are still many technical challenges experienced by compliant taxpayers due to constant breakdowns in the system, which indicate that there is need to provide sufficient time for a robust system to be developed, tested and stabilised before taxpayers are punished for challenges that are not of their own making. Globally, implementation of electronic invoices has been staggered over several years to ensure that businesses are adequately prepared, and to manage disruption. The abolition of waiver of penalties and interest should also be reversed as there are many cases that deserve waiver where there are justifiable reasons such as grey areas in the law. Some of the proposed changes should be saved for later.

The Finance Bill is prepared on an annual basis that accords the Government an opportunity to defer some changes to subsequent years. It is notable that Finance Act 2023 has had a huge impact on taxpayers and it is prudent to pause and give room for the full impact of recent changes to be felt and for taxpayers to adjust to these changes before other equally burdensome taxes and levies are introduced. Furthermore, frequent changes in tax policies make it difficult for taxpayers to comply and increase the cost of doing business thus making the country unattractive for investment.

In addition, proposals that are likely to lead to tax leakage should be avoided at all costs. A good example of such a proposal is the proposed exemption of reimbursement made to public officers – this proposal will not only deprive the Government the much-needed revenue but is also likely to lead to huge tax leakage occasioned by tax planning. 

“The only difference between death and taxes is that death doesn’t get worse every time the Congress meets”.  These are the words of Will Rogers, a renowned American social commentator. Inevitably, most taxpayers will identify with this quote in a couple of days once the Bill is assented into law, not later than 30 June 2024. 

In the face of a heavy debt burden that is currently averaging 70% of the GDP, it is worth appreciating that the Government is faced with a tough situation of striking a balance between meeting the demands of citizenry and raising additional revenue to finance its expenditure. That said, the Government ought to consider the concerns raised on the burden of taxation and ensure the policies do not curtail economic growth. For the legislature, it must ensure that the opportunity granted to the public under the Constitution for public participation is not taken for granted and that the voice of the public does count. We can only hope that the Committee and the National Assembly will seriously consider the input provided by various stakeholders and indeed adopt those that would address the key concerns and result in a better outcome for taxpayers and the economy at large. 

Fredrick Kimotho is an Associate Director with Deloitte East Africa. The views presented are his own and not necessarily those of Deloitte. He can be reached at

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