On 12 June 2021, the National Assembly published the Finance Bill 2021, which contains the measures of Budget for 2021/22. This Act shall come into operation on 1 July 2021. The Bill proposed the following things:

• The definition of the term “permanent establishment” is expanded to provide that, where an agent other than an independent agent is acting on behalf of another person, that other person shall be deemed to have a permanent establishment if:
  • the agent other than an independent agent has and habitually exercises authority to conclude contracts or issues invoice on behalf of that other person, unless their activities are limited to the purchase of goods or merchandise for that other person;
  • the agent other than an independent agent has no authority to conclude contracts, but habitually maintains stock of goods or merchandise from which they regularly deliver goods or merchandise on behalf of that other person; or
  • the agent other than an independent agent habitually secures orders, wholly or almost wholly for that other person or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that of that other person;
• A 2% withholding rate is proposed to be introduced on payments by resident companies dealing with agricultural, livestock and fishery products.
• The Bill amends to reduce the income tax rate from 9% to 8% for the lowest taxable employment income band and adjustment of income brackets as follows:

• Where a taxpayer is required to submit an official translation of communication or document not in an official language (Kiswahili and English), it is provided that the deadline under Section 44 (Notice to obtain information) will apply, which is 14 days.

Accordingly, the Bill 2021 also includes various amendments regarding VAT rates/exemptions, stamp duty, excise and customs duties, and other changes.