Kenya’s President William Ruto has signed the Tax Laws (Amendment) Bill 2024 and the Tax Procedures (Amendment) Bill 2024 into law on 11 December 2024.
Key provisions of the Tax Laws (Amendment) Bill 2024 and the Tax Procedures (Amendment) Bill 2024
Minimum top-up tax (GMT)
A Minimum Top-Up Tax has been enacted to ensure that multinational enterprises (MNEs) with annual revenue over EUR 750 million (KES 100 billion) and an effective tax rate below 15% pay at least a 15% tax rate.
Significant economic presence tax
A significant economic presence tax has been introduced, replacing the 1.5% digital services tax, and non-residents earning income through digital marketplaces will pay 30% of 10% of deemed profits. The returns are due by the 20th of the following month.
Withholding tax on payments
A withholding tax on payments for goods supplied to public entities has been introduced, set at 5% for non-resident suppliers and 0.5% for resident suppliers.
Expanded tax rules for digital marketplaces
The definition of “digital marketplace” has been amended for income tax purposes and to expand the tax base for digital platform owners. It now includes ride-hailing, food delivery, freelancing, and other professional services.
VAT exemptions on key supplies
Certain supplies have been reclassified as VAT exempt, including the transfer of a business as a going concern, inputs for agricultural pest control products, fertilizers, materials used in diapers and sanitary production, denatured ethanol, and raw materials for textile manufacturing in Kenya.
Extension of the tax amnesty
The tax amnesty has been extended for interest and penalty relief on unpaid taxes up to 31 December 2023 if the principal is paid by 30 June 2025.
Penalty for failure to withhold or remit taxes
A penalty has been introduced for withholding tax agents who either fail to withhold or remit taxes, set at 10% of the tax that was not withheld or remitted.
Updated requirements for electronic tax invoices
Revisions have been made to clarify the information that should be included in an electronic tax invoice, including the supplier name, the PIN and serial number, the date and time of the issued invoices, etc.;
Changes to Excise Duty Act
Amendments to the Excise Duty Act have been finalised and will now require non-residents offering excisable services in Kenya through digital platforms to pay excise duty.
These amendments will come into effect on 27 December 2024.
Earlier, Kenya’s National Assembly presented the Tax Laws (Amendment) Bill 2024 along with the Tax Procedures (Amendment) (No.2) Bill 2024 on 1 November 2024.
