We highlight the Kenyan 2019/2020 budgetary proposals submitted by CS Henry Rotich, specifically the tax proposals and amendments.

1. KENYA FY 2019/20
BUDGET HIGHLIGHTS
Tsavo Management Consultants Limited

2. Disclaimer!
This presentation is for general information purpose only
and does not constitute professional advice. Tsavo
Management Consultants Limited does not assume any
responsibility for any loss suffered by any party upon
reliance on the information contained in this presentation.
The Budget proposals presented may be amended before
the enactment of the Finance Bill.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

3. Background
Budget Theme: Creating Jobs, Transforming Lives -
Harnessing the ‘Big Four’ Plan.
The Fy 2019/20 seeks to address the following challenges:
• Creating an enabling environment, specifically for SMEs
• Prudence and efficiency in public spending
• Mobilization of funds for priority projects
• Reduction of the fiscal deficit
• Reforms implementation to enhance efficiency and
competitiveness
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

4. Taxation Proposals: Income Tax
Capital Gains Tax
Proposed increase of the Capital Gains Tax rate from 5% to
12.5%.
Proposed exemption from Capital Gains Tax transfer of
property necessitated by corporate entities restructuring.
Lower Corporation Tax
Proposed lower corporation tax to 15% for the first five
years for any investor operating a plastic recycling plant.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

5. Income Tax
Withholding Tax
Proposal to expand the scope of withholding tax by
subjecting additional services, other than professional &
management fees, to withholding taxes.
These services include:
• Security services
• Cleaning & Fumigation services
• Catering services offered outside hotel premises
• Transportation of goods (excl. air transport services)
• Sales promotion, marketing and advertising services
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

6. Income Tax
Turnover Tax
Proposed re-introduction of turnover tax at the rate of 3% of
gross sales amount for businesses whose turnover does
not exceed Ksh 5 million. Presumptive tax maintained.
Digital Sector
Proposed taxation on income earned from business based
on the digital platform.
Ajira Digital Programme
Exemption from income tax for youth registered under this
programme for three years, effective 1st January 2020.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

7. Value Added Tax
VAT Refunds
Proposed adjustment in the Vat Refund formula to enable
taxpayers fully recover input tax relating to zero-rated
supplies.
Withholding Vat
Proposed reduction of Vat withholding from 6% to 2% to
reduce build up of Vat credits and enhance cash flows to
the business community.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

8. Value Added Tax
Vat Exemptions
Proposed exemption from Vat locally manufactured
motherboards and all inputs used in their manufacture.
Proposed exemption from Vat all services offered to plastic
recycling plants and supply of machinery and equipment
used in the construction of these plants.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

9. Customs Duty
Metal & Allied Sector
Retained ad valorem import duty rate of 25% on imported
steel and iron products.
Paper & Paper Boards products
Import duty rate of 25% retained for an additional one year
period.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

10. Customs Duty
Timber & Furniture Industry
Proposed reduction of import duty on raw timber from 10%
to 0%.
Retained ad valorem import duty rate of 25% on imports of
finished timber products.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

11. Excise Duty
Betting Industry
Proposed introduction of excise duty on betting activities at
the rate of 10% of amount staked.
Electric-powered motor vehicles
Proposed reduction of excise duty on motor vehicles fully
powered by electricity to 10%.
Cigarettes, Wines and Spirits
Proposed increase in excise duty on cigarettes, wines and
spirits by 15%.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

12. Excise Duty
Tobacco and Alcohol
Excise duty increases as follows:
• Excise duty on a 750ml bottle of wine increases to Ksh
136
• Excise duty on a 750ml bottle of whisky increases to
Ksh 182
• Excise duty on a packet of 20 cigarettes increases to
Ksh 61 per packet.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

13. Tax Procedures Act
• To encourage SMEs list under GEMS program and clean
their tax records- Proposed amnesty on tax penalties and
interest on any outstanding tax for two years prior to
listing. The principal taxes shall be paid in full.
• To enhance financial services access to visiting
foreigners, privileged persons and foreign investors-
Proposed amendment to the Tax Procedures Act to
empower the Commissioner to grant exemption from pin
requirement, in certain circumstances, when opening a
bank account.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

14. Fees & Levies
• Anti-adulteration levy on kerosene: Proposed introduction
of a provision in the Miscellaneous, Fees and Levies Act,
2016 that will allow manufacturers of paint and resin to
get a refund on the levy paid.
• Railway Development Levy: Proposed increase in the levy
for finished products imports from 1.5% to 2%.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

15. Fees & Levies
• Import Declaration Fee: Proposed reduction on IDF on
raw materials and intermediate goods from 2% to 1.5%,
while increasing the rate on finished goods from 2% to
3.5%.
• Export Levy: Proposed introduction of export levy on
tanned and crust hides and skins at 10%.
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited

16. Contact Us
Tsavo Management Consultants Limited
TRV Plaza, Muthithi Road
Tel. 0700 053980
Emaill: info@tsavoconsultants.com
www.tsavoconsultants.com
Accounting Tax Payroll Advisory Training
Kenya Fy 2019/20 Budget Highlights Tsavo Management Consultants Limited