• The eight per cent VAT on petroleum will be under transition despite upsurge of global oil prices, affecting all taxpayers and consumers of petroleum products.
• Robin Hood Tax that had also been proposed under Finance Bill 2018 however did into appear in the new budget, an advantage to property transfers and investors.
Treasury CS Henry Rotich seemed to play safe while presenting the 2019/20 budget on Thursday, shying away from perceived 'hot topics' that directly affect citizens.
CS Rotich failed to touch on tax measures and policies introduced in the current financial year and embedded in the Finance Act, 2018, including fuel tax and mobile charges that sparked national uproar.
The policy introduced VAT at 8 per cent on petroleum products which had previously been exempted.
In the new budget, the policy will be under transition despite upsurge of global oil prices, affecting all taxpayers and consumers of petroleum products.
Salaried Kenyans and employers should also expect to contribute 1.5 per cent tax each to housing fund to build low-cost homes. This is after announcement of Sh5 billion allocation from their contributions to the National Housing Development Fund.
The levy has been facing opposition especially from employers with several court appeals. It has currently been suspended by Labour Court after case filed by Consumers Federation of Kenya.
Mobile money and bank customers did not get any reprieve on their transactions.
The excise duty from 10 per cent to 20 per cent as amended last year on all bank fees and commissions banks charge on transactions, including transfers both local and international, over-the-counter and ATM withdrawals did not change.
The increased excise tax on mobile money transfers to 12 per cent from 10 per cent and rate on telephone and Internet data services jumped to 15 per cent from 10 per cent will still remain.
The Robin Hood Tax that had also been proposed last, however did into appear in the new budget.
The tax required a payment of 0.05 per cent to the Exchequer for any money transferred by banks, money transfer agencies and other financial service providers in amounts of Sh 500,000 or more.
CS Rotich slightly touched on privitisation with only a key focus on the sugar industry.
“The government will implement the recommendations from the Task Force formed in November 2018 to solve challenges faced by the sugar industry, In the meantime pay all outstanding debts owned by sugarcane farmers,” he said.
Privitisation was set to raise funds for rehabilitation of sugar factories including Chemelil Sugar Company, South Nyanza Sugar, Nzoia Sugar Company, Miwani Sugar and Muhoroni Sugar Company Limited.
In its efforts to recapialise from partially or wholly owned entities the government said it will support the merger between National Bank and Kenya Commercial Bank.
The merger of the Tourism Finance Corporation, IDB Capital and the Industrial & Commercial Development Corporation (ICDC) to form the Kenya Development Bank will the proceed as recommended by the committee.
The intended aim was to reduce dependence on the Exchequer and taxpayers in financing the governmental organizations and eliminate duplication of mandates.
However, he did not mention the fate of other corporations including Kenya Meat Commission where the government holds 100 per cent stake, KenGen (70 per cent), Kenya Ports Authority - Eldoret Container Terminal and New Kenya Co-operative Creameries.
A mute on tax amnesty on foreign income may mean that Kenyans abroad will continue to enjoy an extension of the grant.
The exclusion on tax on the flows was first to be enjoyed until on 31st December 2016. it was then amended in April 2017, pushing the deadline to allow full amnesty provided the income was declared and funds realized were transferred to Kenya no later than 30th June 2018.
This was further amended and the transitional period is expected to expire in June 30th 2019. The effect has contributed to the surge of foreign exchange reserves by 26 per cent to an all-time high of Sh10.06 billion ($10,062 million).