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The Finance Bill 2024, initially presented in parliament in May, has passed its second reading, despite significant public opposition. The bill proposes increased taxes and levies, including a 1.5% digital tax on local platforms that offer services such as online jobs, rentals, food delivery, and ride-hailing, pending parliamentary approval.
Additionally, the bill includes a value-added tax (VAT) on electric bikes, buses, and solar and lithium-ion batteries. This has raised concerns from the Nairobi-based Associated Battery Manufacturers (ABM), which warn that it could increase the cost of a 60-kilogramme solar battery in Kenya by $312 (45,000 Kenyan shillings).
The proposed introduction of a 6% Significant Economic Presence (SEP) Tax has also generated significant backlash from ride-hailing companies. These companies fear that the tax will impede their operations and potentially force them to exit the market.
Despite growing concerns, the president views the bill as a means to improve the country’s tax environment and address its debt. In response to public outcry, the presidency announced the removal of several of the bill’s most controversial aspects, such as taxes on essential items and services.
“The Finance Bill has been amended to remove the proposed 16% VAT on bread, transportation of sugar, financial services, foreign exchange transactions, and the 2.5% Motor Vehicle Tax,” stated the presidency. “Additionally, there will be no increase in mobile money transfer fees, and the Excise Duty on vegetable oil has also been removed.”
Amid the heated debate over the bill, the hacktivist group Anonymous has threatened to expose “corrupt deals involving members of parliament (MPs)” if the bill is approved. This adds another layer of tension to the already contentious legislative process.
The developments surrounding the Finance Bill 2024 reflect the ongoing struggle between governmental fiscal policies and public sentiment, highlighting the need for balanced and transparent governance.
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