On 13^th June, 2019, the Cabinet Secretary (CS) for the Treasury presented the budget statement for the 2019/2020 financial year to Parliament. The following are the salient proposals in the Budget Statement.

Taxation

The following are some of the changes that the CS has proposed with regard to taxation:

1. Introduction of excise duty on betting activities at the rate of 10% of the amount staked;
2. Reduction of excise duty on electric vehicles to 10%;
3. Increase in excise duty for cigarettes, wines and spirits;
4. VAT exemption for services offered to plastic recycling plants and the supply of machinery and equipment in the construction of the plants;
5. Reduction in the rate of withholding VAT to 2%;
6. Application of withholding tax to fees paid for security services, cleaning services, fumigation services, catering services offered outside hotel premises, sales, promotion, marketing and advertising;
7. Abolition of import duty on raw timber; and
8. Exemption from VAT for locally manufactured motherboards and all inputs used in their manufacture.

In addition to the Finance Bill which will contain the above amendments, the CS also stated that the Income Tax Bill is in advanced stages of drafting and will be tabled in Parliament soon.

Assorted changes

The CS proposes to have the Competition Act amended to enhance the provisions on abuse of buyer power in order to empower the Competition Authority to effectively deal with abuse of buyer power and ensure prompt payment to suppliers.

The CS proposes to have the Insurance (Motor Vehicle Third Party Risks) (Certificate of Insurance) Rules amended to require all motorcycle taxis and rickshaw taxis (locally known as bodabodas and tuktuks) to take up insurance cover for passengers and pedestrians.

The CS proposes to have the Insurance Act amended to allow for the usage of the Policy Holder’s Compensation Fund to compensate holders of insurance policies of insurers who are under statutory management.

The CS proposes to have the Capital Markets Act amended to empower the Capital Markets Authority to enforce penalties and sanctions on market players who violate laid down rules and procedures.

The CS also announced the following:

1. The constitution of a team to validate outstanding VAT refund claims and clear them within the next 2 months;
2. The setting aside of funds for the payment of outstanding bills owed by the national government and county governments; and
3. The consolidation of the three funds which have been providing start-up capital and business support to women and the youth namely, the Women Enterprise Fund, the Youth Fund and the Uwezo Fund.

We shall update you further once the Finance Bill 2019 is published.

Please contact us on info@cfllegal.com should you require further information.