The tax implication of 2022/2023 budget
11 April 2022
Good morning. The Nairobi expressway is closer than ever to completion. Below is an illustration of how to use the expressway once it is completed.
2022/2023 Budget
Proposed taxes in the 2022/2023 budget
Input and raw materials used in the local manufacture of passenger motor vehicles are to be exempted from VAT.
The finance bill 2022 proposes:
The removal of flour (maize, wheat & cassava) from VAT zero-rated status. (meaning that a 16% VAT will be an added to the price of flour)
The introduction of a 15% tax on gains from financial derivatives.
A 15% tax rate will be charged on Capital Gains arising from the sale of shares/property not on the Nairobi Stock Exchange.
Excise tax on betting set at 20% (up from 7%).
A 15% excise duty on the advertisement of alchoholic beverages and betting.
Companies and individuals who appeal decisions of the tax tribunal to first deposit 50% of the disputed amount at the Central Bank of Kenya pending determination.
Debt:
Treasury proposed the replacement of a debt ceiling with a debt anchor of 55% of Kenya’s GDP.
Insurance:
Motorcycles and three-wheelers to take out insurance for their passengers.
Check out this detailed breakdown of the budget by Mwango Capital
FOREX
Eco-bank resumed trading
Ecobank resumed trading as an authorized foreign exchange dealer following the lifting of the suspension imposed by CBK (Central Bank of Kenya).
Background: Last month, the CBK issued a statement against the bank barring it from foreign exchange trading in Kenya between March 29 and April 4 as part of regulatory action citing unsafe trading practices.
INSURANCE
Resolution insurance placed under statutory Management
The Commissioner of Insurance placed Resolution Insurance Company Limited under Statutory Management and appointed the Policyholders Compensation Fund (PCF) as the Statutory Manager for a period of 12 months, starting 5th April 2022.
The PCF is a State Corporation that provides compensation to the claimants of an insurer placed under Statutory Management. Claims payable by PCF will be capped at KSh250,000.
Data from the Insurance Regulatory Authority shows the insurer reported an underwriting loss of KSh457.32 million in the financial year ended December 2021, with 11 out of 12 classes of insurance posting losses.
NATIONAL ASSEMBLY
Parliament opened an inquiry into the amount of money collected under the Fuel Levy Fund
Last week, the National Assembly and the Senate accused the government of creating the fuel shortage by failing to pay the subsidy owed to oil marketers.
As a result, parliament will require the Petroleum and Mining Cabinet secretary to provide a detailed breakdown of reimbursement of fuel levy fund per month from September 2021 to date.
The Cabinet secretary will also be required to provide data on reimbursements to be paid to oil marketing companies (OMCs), petroleum dealers, and small oil dealers.
COMPETITION
Competition Authority of Kenya to investigate whether the price increase of goods is justified
The Competition Authority of Kenya stated that it may conduct a survey to ascertain whether the current increase in the price of basic commodities is justified.
The Competition Authority of Kenya (CAK) director for policy stated that despite the global shocks that have seen prices of most commodities surge, the possibility of some players engaging in price gouging to cash in on the prevailing economic situations in the country could not be ruled out.
WHAT YOU MIGHT HAVE MISSED
A mobile app that helps fight the Nairobi garbage menace
HATUA allows users to file complaints on poorly disposed waste and report places strewn with garbage such as a bus stop, or garbage trucks dumping waste in residential areas.
The application, which is designed by the Kenya Alliance of Residents Association (Kara) in association with the United Nations Development Programme (UNDP) and the European Union (EU), is aimed at improving service delivery across the county.
Airtel Africa to stop investing in tower infrastructure
Airtel Africa announced that it has stopped investing in tower infrastructure in Kenya and other markets across the continent. The company intends to sell most of its existing assets.
“Airtel Africa is focusing on an asset-light business model and has divested most of its telecommunications tower portfolio and is in the final stages of divesting the majority of its remaining tower portfolio to tower companies,” - International Finance Corporation (IFC)
New requirement for buildings in Kenya
Proposed building regulations state that every building coming up in Kenya with more than 2 floors will be required to have lifts, ramps, and special toilets for the disabled.
According to the proposed rules, a new building should be designed in a manner that facilitates access to the building, and to the use of its facilities, by a person living with a disability.
VISA opens an innovation studio in Nairobi
Visa’s Innovation Studio was opened this week in Nairobi by the CBK governor. It joins a network of innovation centers operated by Visa since 2016, in cities like London, Dubai, and Singapore.
Universal Till Number
Airtel and Telkom users are now able to pay for goods and services using Safaricom’s Till number. However, access to a universal Paybill has been delayed until next year.