On 13 June 2019, the Finance Minister, Henry Rotich of Kenya presented the budget for 2019/20 to the parliament. The budget includes the following tax related measures:
- Capital Gains Tax is proposed to be increased from 5% to 12.5%. There is no indication that indexation will be introduced to take into account the effects of inflation over time;
- An exemption from capital gains tax on the transfer of property is introduced that is necessitated by the restructuring of corporate entities;
- A tax incentive is introduced in the form of an amnesty on penalties and interest levied on small- and medium-sized enterprises (SMEs) listed under the Growth and Enterprise Market Segment (GEMS)
- A reduced corporation tax rate of 15% is proposed for the first five years for any investor operating a plastic recycling plant;
- Services that are subject to withholding tax is to be expanded to include security services, cleaning and fumigation services, catering services offered outside hotel premises, transportation of goods excluding air transport services, sales promotion, and marketing and advertising services;
- Framework on the implementation of the 30% rebate on total electricity costs by manufacturers introduced through the Finance Act 2018 has now been developed;
- The withholding tax applied to services rendered by the head office to its permanent establishment in Kenya is introduced when such services are deemed to be taxable in accordance with a tax agreement;
- E-commerce platforms (digital market place) into taxation is to be proposed; and
- Clarity provided that reinsurance premiums paid to nonresidents are also subject to withholding tax.
