Finance Bill 2018: here is how new taxes will affect you

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Kenya today continues to discuss the controversial Finance Bill 2018 that was signed by the President Uhuru Kenyatta on Friday, September 21. Kenyans wonder how the new law will affect their lives. Do you also want to have the clear answer and understand how your life will change? Let’s try to figure out this together.

The first what you need to know are the following rates:

  • 8% tax for all petroleum products
  • from the salaries over KSh 100,000 will be a mandatory deduction amounting to 1.5%
  • additional 1.5% will be contributed for the National Housing Development fund
  • betting will be taxed at 35% (20% from winnings, and 15% from betting companies)
  • kerosene will be clapped on KSh 18/litre (this will make kerosene cost as diesel)
  • 15% duty for internet and telephone services

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The new law, which in any case is a heavy burden for the Kenyans, who are already loaded with a high cost of living in the country, ironically helped Uhuru, when he sought to revive the Kenyan economy that was almost collapsed under his watch.

We have found the main provisions of the law, which mainly contains proposals of the President aimed at obtaining more income to help achieve his Big Four Agenda.

Kenyans were scared for a long time by the proposals of the President that now have become a law. Now, many citizens of the country can’t sleep well thinking about how this new law will affect their lives.

First of all, it is clear that Kenyans will pay the way more for fuel. Before the Finance Bill 2018 was signed, this product was zero-rated, and now the price will be higher due to the new tax for petroleum products. The advance in the fuel price will in turn influence the cost of food and price for transport services, and all businesses related to transport. So, this tax will influence every citizen in the country not only those who were lucky to have a car.

Many Kenyans who are using kerosene for household needs (mainly cooking and lighting) will be upset by the KSh 18/litre tax levied on kerosene. Such changes will make kerosene and diesel products of the same price. This is a strategy to fight diesel adulteration by adding paraffin in it. Now there will be no point to continue doing this.

Also, will be affected those employees who have salaries higher than KSh 100,000. From their monthly earnings, 1.5% will be mandatorily deducted. Additionally, 1.5% will be taxed on the employer, this money is supposed to be contributed for the housing project called the National Housing Development Fund. However, the total contribution for this fund must not exceed KSh 5,000.

Those who like betting also will feel the force of the new law. Finance Bill 2018 prescribes 35% tax for lottery and betting wins. This tax is combined, 20% will be deducted from winnings, and the betting firms will pay 15%.

Everybody in the country will be influenced by the new internet and telephone services duty amounting to 15%. This will be accompanied by the increased tax on mobile money transfers, which will be now 12%.

Finance Bill 2018 imposes 20% of the excise tax on the amount accrued on money transfers by banks and financial services providers, in addition to 20% of the excise tax on financial institutions.

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