President William Ruto has given his assent to the Finance Bill 2023, signing off on the implementation of new taxes beginning July 1.
It gives effect to the money bill, which was adopted by Members of Parliament on Wednesday with the inclusion of 51 amendments.
The new taxes, which now make up the Finance Act, 2023, include the controversial 1.5 percent deduction on salaried workers to the affordable housing kitty known as the housing levy.
Despite widespread opposition to the introduction of the new levy, the majority of MPs backed it in a unanimous vote which cemented the new statutory deduction charged on employees' gross monthly earnings and matched by employers at the same rate.
The second controversial provision in the Act is the raising of VAT on petroleum products from eight percent to 16 percent, setting the stage for higher fuel prices as soon as this Saturday.
Other expected changes in taxation include a higher rate of turnover tax on enterprises for those making gross sales of between Sh1 million and Sh25 million. The rate of tax has risen from one to three percent.
Local digital content creators are now subject to the five percent withholding tax on income from the monetisation of their content.
The 2023 Finance Act has also introduced two new pay-as-you-earn (PAYE) tax bands at 32.5 percent and 35 percent for income between Sh500,000 and Sh800,000 a month and income above Sh800,000 respectively.
Punters have also been caught up in the new taxes web as the Act lifts excise duty on wagers from 7.5 percent previously to 12.5 percent.
Nevertheless, the wagered amounts will be exempt from withholding tax on winnings whose rate is set at 20 percent.
Additionally, the 2023 Finance Act carries non-tax proposals including a longer window to offset forex losses by non-resident firms up to five years from the current window of three years.
