The Finance Bill 2024 (the Bill) was introduced to the National Assembly on 9th May 2024. Further to our earlier analysis, we have reviewed the current version of the Bill and set out below the key proposed changes.

(a) the Income Tax Act

• Motor vehicle tax – the Bill proposes to introduce a tax known as motor vehicle tax at the rate of two-point five per cent (2.5%) of the value of the motor vehicle. This tax will be payable at the time of issuance of insurance cover for motor vehicles;
• Withholding tax on goods supplied to public entities – the Bill proposes to introduce withholding tax on goods supplied to public entities by both resident persons and non-resident persons without a permanent establishment. The applicable withholding tax rate shall be three per cent (3%) of the amount paid if the payment is to a resident person and five per cent (5%) if the payment is to a non-resident person;
• Taxation of income from operation of digital marketplace or platform and digital content monetization – the Bill proposes to tax the income of a resident or non-resident person who owns or operates a digital marketplace or platform, makes or facilitates payment in respect of digital content monetization, goods, property or services. The tax will apply at the rate of twenty per cent (20%) for non-residents and five per cent (5%) for residents;
• Repeal of provisions on Digital Service Tax and introduction of Significant Economic Presence Tax – the Bill proposes to repeal the provisions on digital service tax (DST) and introduce a tax known as significant economic presence tax at the rate of 30% of the deemed taxable profit. The tax will be payable by a non-resident person whose income from the provision of services is derived from or accrued in Kenya through a business carried on over a digital marketplace;
• Minimum top-up tax on certain resident entities that are members of multinational groups – the Bill seeks to introduce a minimum top-up tax which will be payable by a covered person where the combined effective tax rate in respect of that person for a year of income is less than fifteen per cent (15%).  A covered person is defined as a resident person with a permanent establishment in Kenya who is a member o