By Anita Otieno

The Finance Bill, 2020 was signed into Law in June to amend a number of laws in Kenya, including the Income Tax Act, the Value Added Tax Act, the Excise Duty Act, the Tax Procedures Act and the Miscellaneous Fees and Levies Act among others. The Bill was recently signed into Law. The highlights of the Finance Act, 2020 (the Act) are discussed below.

With the effects of the pandemic still being felt by many Kenyans, it is significant to note that part of the 2020/21 Budget contains a post Covid-19 economic stimulus package for the counties. This is in a bid to alleviate the negative impact that the current pandemic has had on the economy.

Some of the amendments in the Act include the zero rating of VAT on maize, cassava and wheat flour for 6 months to make the most commonly consumed foods more affordable for Kenyans. 

The Act also extends the zero rating of VAT on cooking gas for one year contrary action to which would have been frowned upon by most Kenyans. There have been campaigns to reduce the use of wood, charcoal, and increased access to clean energy and cooking methods. Imposing VAT on cooking gas, as proposed would have resulted in an increase of the cost of cooking gas, which would have taken the country’s fight against crude cooking methods backwards.

The law introduces a digital services agent who is responsible for the collection and remittance of digital service tax. The digital services tax increases the cost of importing goods through digital platforms such as Amazon.

The proposal to increase tax on betting companies in Kenya was rejected. This proposal saw giant betting companies; Sportpesa and BetIn discontinue their services in Kenya. It will be interesting to see whether the cancellation of increased taxes on the companies will see them return to the Kenyan market.

The Finance Act has aimed at increasing the tax base in Kenya. Treasury will assess whether they have met this aim in June next year.